From Communists to Foreign Capitalists

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  • Format: Hardcover
  • Copyright: 2007-11-19
  • Publisher: Princeton Univ Pr

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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 Tablesp. ix
List of Figuresp. xi
Acknowledgmentsp. xiii
Prologuep. xvii
Social Foundations of the Economyp. 1
The Argumentp. 2
A Social-Constructivist Perspective on Economic Organization and Actionp. 8
The Empirical Case: Foreign Direct Investment in Postsocialist Europep. 16
From Socialism to Postsocialismp. 29
Socialismp. 30
Challenges of the Transformation: Shock Therapy versus Gradualismp. 43
The Context of Transformationp. 46
Conclusionp. 64
Institutionalization of FDI in Postsocialismp. 65
FDI as Instituted Processp. 66
Legitimization of FDI Practicep. 70
FDI Trends since 1989p. 88
Explaining FDI Inflows across Countries over Timep. 91
How Postsocialist States Create Marketsp. 99
Conclusionp. 101
Cross-Country Patterns in FDI Flowsp. 103
From Country Characteristics to Relations between Countriesp. 104
Social Relations as Determinants of FDI Flowsp. 111
Embeddedness and Globalizationp. 126
Conclusionp. 130
Embeddedness of Organizational FDI Attemptsp. 131
Invested Transactions: The Intricacies of FDI Attemptsp. 131
What Determines FDI Transactions?p. 143
Network Embeddednessp. 145
Cultural Embeddednessp. 149
Political Embeddednessp. 155
Macro-Institutional Embeddednessp. 159
Embeddedness: Structures-Power-Culture Configurationsp. 162
Conclusionp. 166
Uncertainty and the Practice of FDI Transactionsp. 168
Rethinking Instrumental Rational Actionp. 169
Uncertaintyp. 174
Practical Action Modelp. 177
Substantive Varieties of Rationalityp. 179
Procedural Varieties of Actionp. 181
Logic of Decision-Making Practice: Routines, Emotions, Creativityp. 189
Conclusionp. 194
Embedded Economiesp. 196
Creation of Markets: From One Kind of Embeddedness to Anotherp. 196
Operation of Markets: Structures-Power-Culture Configurationsp. 200
Varieties of Postsocialist Capitalismp. 206
Conclusionp. 218
Epiloguep. 221
Appendix on Method and Data Sourcesp. 223
Notesp. 243
Referencesp. 255
Indexp. 291
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