The modern epoch of globalization cements the ties among national economies that influence each other increasingly more seriously. Therefore, it is becoming critical to examine the principles different states rely on to reach economic prosperity. This can be done effectively with the Variety of Capitalism (VoC) approach. Its multi-dimensional framework enables comparing and contrasting the models of industrial relationships that are polar but equally successful.
The VoC approach considers a range of features that influence the labor market in a particular country. Those are gender policy, migration policy, job quality, density of labor union membership, and other. For instance, unions are noticeably more popular in Germany than in the USA, which is one of the reasons why the two economies belong to different types (Bamber et al., 2016). Comparing various states by a range of criteria helps to identify the varieties of capitalism in them and predict their further development.
Also, the VoC involves exemplars, the so-called ideal types, which makes it practical. Those types are two models of economic equilibrium based on different forms of corporate governance and mechanisms used for resolving coordination problems (Bamber et al, 2016). The USA and Germany are regarded as archetypes of the two varieties and, consequently, examples to follow. The VoC approach provides a detailed description of the differences, allowing a choice of the model that would be more suitable in a particular economy.
To summarize, the Varieties of Capitalism approach is effective for comparing national economies due to the variety of criteria it involves. In addition, it includes two divergent ideal types of economic development, the prime exemplars of which are Germany and the USA. A comparison with the use of the VoC approach allows classifying capitalism in a certain state and choosing the most relevant model to apply to it.
Reference
Bamber, G. J., Lansbury, R. D., Wailes, N., & Wright, Ch. F. (Eds.). (2016). International & comparative employment relations: National regulation, global changes. Routledge.