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The Transnationalization of Economies, States, and Civil Societies pp 135–155Cite as

The Politics of the Competition State: The Agents and Mechanisms of State Transnationalization in Central and Eastern Europe

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Around 2000, after a period of distinct national strategies, the states in the Visegrád Four (V4) region converged towards a competition state.1 The dominant state strategies aim at promoting competitiveness by attracting foreign direct investment (FDI). The states are thus increasingly internationalized, forging economic globalization by facilitating capital accumulation for transnational investors. After the collapse of the Eastern Bloc, many had expected foreign investors to play crucial role in ‘transition’. However, little of that had materialized. State strategies aimed at promoting national accumulation dominated the region up until the mid-1990s. Inward-oriented regimes had been transformed into the states that were fine-tuned to compete for mobile transnational capital by the end of the decade. So why did the state strategies converge towards the competition state only around 2000? What does it tell us about the processes in which the states adapt to the environment of economic globalization, on the one hand, and help to reproduce it, on the other? What are political and social preconditions for the rise of the competition state, and what are its implications?

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Notes

  1. 1.

     The V4 includes the Czech Republic, Hungary, Poland and Slovakia.

  2. 2.

     Further details and supporting evidence for claims made in this section can be found in Drahokoupil (2008).

  3. 3.

     Established in interviews with people who were in contact with Klaus at that time (e.g. Havelka and Vrba). For additional evidence, see Myant (2003).

  4. 4.

     As observed by key observers (interviews with Jan A. Havelka, Prague, 30 December 2005; Radomil Novák, CzechInvest’s advisor to CEO and director in 2004, Campbell, CA, 29 March 2006; Martin Kavka of Ministry of Industry and Trade, Prague, 21 November 2005; Martin Jahn, CEO of CzechInvest in 1999–2004, now on the board of directors of Škoda-Volkswagen, Mladá Boleslav, 13 March 2006).

  5. 5.

     Resolution of the Czech Republic’s government #476, 13 August 1997. See, for example, ‘Vláda pootevřela dveře investici amerického Intelu [The government open the door to Intel],’ Mladá fronta Dnes, 14 August 1997.

  6. 6.

     Resolution of the Czech Republic’s government #723, 19 November 1997. In the end, neither Intel nor GM invested in the Czech Republic.

  7. 7.

     Interviews with Jan A. Havelka, Prague, 30 December 2005.

  8. 8.

     Resolution of the Czech Republic’s government #298, 29 April 1998.

  9. 9.

     See http://www.ipec-group.com.

  10. 10.

     See, inter alia, Hirschman (1970); Przeworski & Wallerstein (1988); Offe and Ronge (1975); Gough (1979). For a detailed discussion of structural/agency power of capital, see Gill and Law (1989) and Farnsworth (2004).

  11. 11.

     Wolf’s notion of tactical power largely corresponds to the agenda-setting face of power as conceptualized by the faces of power debate in the political science (see Hay, 2002, pp. 174–178).

  12. 12.

     Csaba Kilián (investment director of ITDH), ‘Background information for the Max Planck-ITDH meeting’, Budapest, 16 November 2007.

  13. 13.

     Interview with Tibor Takács, Katalin Zsámboki and János Rajki of ITDH, Budapest, 16 November 2007.

  14. 14.

     Interview with Wojciech Szelagowski, vice president of PAIiIZ, Munich, 25 October 2007.

  15. 15.

     Interview with Wojciech Szelagowski, 25 October 2007. See PAIiIZ (2004, pp. 21–22, 65).

  16. 16.

     The Hungarian European Business Council was established in 1998 upon the initiative of the ERT. HEBC is the Business Council of the Chairmen and CEOs of Hungarian affiliates of ERT enterprises, significant investors of the Hungarian economy such as ABB, Akzo Nobel, BAT, BT, Electrabel, Electrolux, Ericsson, MOL, Nestlé, OMV, Philips, SAP, Suez Environnement and Unilever.

  17. 17.

     Established already in 1986, the JVA aims to ‘represent, protect and exert by all legal means the specific interests of partly or wholly foreign-owned companies registered in Hungary’ (The JVA’s mission statement, available at http://www.jointventure.hu/index.php?cat=intro&lang=en). Its 400-member base includes ABB, Alstrom, Flextronics, Nokia Hungary, Deloitte and PricewaterhouseCoopers.

  18. 18.

     See annual reports of AmCham Hungary. The 2000–2007 volumes are available at http://www.amcham.hu/annualreport/.

  19. 19.

     Interview with György Csáki, economic advisor to the government in 1994–1998, member of the board of directors of the State Privatization Holding in 1996–1998, Budapest, 15 November 2007.

  20. 20.

     Tony Housh, AmCham executive director, American Investor, June 1999, cited in ‘AmCham’s 15 year history’, http://amcham.pl/index.php?mod=page&page=1_history.

  21. 21.

     Interview with Bolesław Domański and Krzysztof Gwosdz, Cracow, 6 November 2007; Wojciech Jarczewski, Instytut Rozwoju Miast [Institute of Urban Development in Cracow], 8 November 2007, Cracow. See also Banaszek et al. (1999, pp. 61–71).

  22. 22.

     See Peter Barecz. SARIO agency playing catch-up to region. The Slovak Spectator 6 (35)/2000; Keith Miller. SARIO promising to bring vital FDI. The Slovak Spectator 6 (28)/2000; Trník (2007).

  23. 23.

     The function of governmental assignee was created by the resolution of Slovak government #447/1997, 17 June 1997, and the resolution #750/2000, 20 September 2000.

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Acknowledgments

I am grateful to László Bruszt, Arjan Vliegenthart and other participants of ERC colloquium for their insightful feedback on earlier versions of this chapter.

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  1. Mannheim Centre for European Social Research (MZES), University of Mannheim, A5, 6, D-68159, Mannheim, Germany

    Jan Drahokoupil

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Correspondence to Jan Drahokoupil .

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  1. Dept. Political & Social Sciences, European University Institute, Via dei Roccettini 9, San Domenico di Fiesole, 50016, Italy

    Laszlo Bruszt

  2. Dept. Political Science, University of Twente, Enschede, 7500 AE, Netherlands

    Ronald Holzhacker

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Drahokoupil, J. (2009). The Politics of the Competition State: The Agents and Mechanisms of State Transnationalization in Central and Eastern Europe. In: Bruszt, L., Holzhacker, R. (eds) The Transnationalization of Economies, States, and Civil Societies. Springer, New York, NY. https://doi.org/10.1007/978-0-387-89339-6_6

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