How Have Austerity Measures Helped Recovery from the Global Financial Crisis

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How have austerity measures helped recovery from the Global Financial Crisis?

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Index
1.Introduction1
2.Comparing with Varieties of Capitalism approach2
2.1.Industrial relations2
2.1.1.Ireland2
2.1.2Iceland3
2.2.Education and Training systems3
2.2.1.Ireland3
2.2.2.Iceland4
2.3.Financial system and Market for Corporate governance4
2.3.1.Ireland4
2.3.2.Iceland4
2.4.Inter-firm relations4
2.4.1.Ireland5
2.4.2. Iceland5
2.5.Intra-firm relations6
2.5.1. Ireland6
2.5.2 Iceland7
2.6.LME or CME conclusion7
3.Comparing austerity measures7
3.1.Ireland7
3.2.Iceland8
4.Framing the Issue of Recovery8
4.1. Ideas as Weapons9
4.2. Ideas as cognitive locks10
5.Conclusion10

1. Introduction

This paper aims to give an insight into the success of austerity as a viable way of recovering from the Global Financial Crisis of 2008. For this purpose I have chosen two countries which appear to be rather similar, the countries are Ireland and Iceland. Both of them are small open countries relying on export. Both countries were hard hit by the Global Financial Crisis in 2008 and therefore seem to be the most logical countries to compare. Their differences seem small, the biggest being that while Ireland is part of the European Union Iceland has so far declined entry, for various reasons. This paper is split into two parts both comparing Ireland and Iceland. The first part of the paper endeavors to expose both the similarities and differences between the countries. To achieve this I decided to compare the countries with Hall and Soskice’s Varieties of Capitalism. In Part one I compare the two countries institutional complementarities, which will give an idea of how similar the two are, to put a perspective on what factors are at work on the two countries. Part one will be split between the two countries, examining industrial relations, education and training systems, the market for corporate governance and access to finance, inter-firm relations and finally intra-firm relations. For the last one I will primarily examine the countries using Hofstede as a starting point to show organizational culture. The second part of the paper attempts to compare the austerity measures taken by the two countries. This will be done with a constructivist approach. I will examine austerity measures and the discourse in media and in policy about the measures to scan for what Blyth names cognitive locks and ideological weapons. This will tell how the austerity measure issue has been framed for the public and from where policy has been decided. 2. Comparing with Varieties of Capitalism approach

In this part of the paper I will be analyzing the countries institutional complementarities setting them up against each other will show whether they are Liberal Market Economies or Coordinated Market Economies, however my interest lies in the comparison of the countries before their type, which does not necessarily have an impact on my main question because I chose countries that are rather similar. This part of the paper is primarily to show that the countries are worth comparing for the sake of the research question, though I will conclude with how I would class the countries I make use of Hall and Soskice’s Five Dimensions: 3.1. Industrial relations

Industrial relations is a key pillar of Hall and Soskice’s framework, it is under this pillar that one examines the relationship between labor and capital, that is the power balance between employers and employees. The best way to get insight into this power relationship is to look at workers rights, wage bargaining, union density and employees participation in decision making. In LME’s we should see company based bargaining, low unionization and top management in unilateral control over company. While in CME’s we would expect, widespread...
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