Institutional complementarity and diversity of social systems of innovation and production

This article proposes an institutional analysis of modern capitalist economies. It argues that the institutional dimension is crucial if one wants to account for the coexistence of different types of modern developed economies, characterised by substantially different institutional structures. It explains why no generalised pattern of convergence towards the same economic model should be expected, in spite of ‘globalisation’. An institutional analysis of modern economies, or social systems of innovation and production, can be made using the concepts of complementarity and hierarchy of institutions. Institutional arrangements are complementary to each other and thus define the coherence as well as the potential for evolution of the various economies. The hierarchy of institution expresses which part of the institutional drives the others and is helpful for understanding historical evolutions. The paper proposes a classification of developed economies and draws some conclusions regarding the usefulness of the concepts of complementarity and hierarchy of institutions for economic policy.