From Communists to Foreign Capitalists

by Bandelj, Nina

• ISBN13: 9780691129129
• ISBN10: 0691129126
• Format: Hardcover
• Copyright: 2007-11-19
• Publisher: Princeton Univ Pr

Summary

From Communists to Foreign Capitalistsexplores the intersections of two momentous changes in the late twentieth century: the fall of Communism and the rise of globalization. Delving into the economic change that accompanied these shifts in central and Eastern Europe, Nina Bandelj presents a pioneering sociological treatment of the process of foreign direct investment (FDI). She demonstrates how both investors and hosts rely on social networks, institutions, politics, and cultural understandings to make decisions about investment, employing practical rather than rational economic strategies to deal with the true uncertainty that plagues the postsocialist environment. The book explores how eleven postsocialist countries address the very idea of FDI as an integral part of their market transition. The inflows of foreign capital after the collapse of Communism resulted not from the withdrawal of states from the economy, as is commonly expected, but rather from the active involvement of postsocialist states in institutionalizing and legitimizing FDI. Using a wide array of data sources, and combining a macro-level account of national variation in the liberalization to foreign capital with a micro-level account of FDI transactions in the decade following the collapse of Communism in 1989, the book reveals how social forces not only constrain economic transformations but also make them possible. From Communists to Foreign Capitalistsis a welcome addition to the growing literature on the social processes that shape economic life.

Table of Contents

List of Tables	p. ix
List of Figures	p. xi
Acknowledgments	p. xiii
Prologue	p. xvii
Social Foundations of the Economy	p. 1
The Argument	p. 2
A Social-Constructivist Perspective on Economic Organization and Action	p. 8
The Empirical Case: Foreign Direct Investment in Postsocialist Europe	p. 16
From Socialism to Postsocialism	p. 29
Socialism	p. 30
Challenges of the Transformation: Shock Therapy versus Gradualism	p. 43
The Context of Transformation	p. 46
Conclusion	p. 64
Institutionalization of FDI in Postsocialism	p. 65
FDI as Instituted Process	p. 66
Legitimization of FDI Practice	p. 70
FDI Trends since 1989	p. 88
Explaining FDI Inflows across Countries over Time	p. 91
How Postsocialist States Create Markets	p. 99
Conclusion	p. 101
Cross-Country Patterns in FDI Flows	p. 103
From Country Characteristics to Relations between Countries	p. 104
Social Relations as Determinants of FDI Flows	p. 111
Embeddedness and Globalization	p. 126
Conclusion	p. 130
Embeddedness of Organizational FDI Attempts	p. 131
Invested Transactions: The Intricacies of FDI Attempts	p. 131
What Determines FDI Transactions?	p. 143
Network Embeddedness	p. 145
Cultural Embeddedness	p. 149
Political Embeddedness	p. 155
Macro-Institutional Embeddedness	p. 159
Embeddedness: Structures-Power-Culture Configurations	p. 162
Conclusion	p. 166
Uncertainty and the Practice of FDI Transactions	p. 168
Rethinking Instrumental Rational Action	p. 169
Uncertainty	p. 174
Practical Action Model	p. 177
Substantive Varieties of Rationality	p. 179
Procedural Varieties of Action	p. 181
Logic of Decision-Making Practice: Routines, Emotions, Creativity	p. 189
Conclusion	p. 194
Embedded Economies	p. 196
Creation of Markets: From One Kind of Embeddedness to Another	p. 196
Operation of Markets: Structures-Power-Culture Configurations	p. 200
Varieties of Postsocialist Capitalism	p. 206
Conclusion	p. 218
Epilogue	p. 221
Appendix on Method and Data Sources	p. 223
Notes	p. 243
References	p. 255
Index	p. 291
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