The trajectory of institutional change in Germany, 1979-2009

Over the last three decades, the German political economy can be characterized by both institutional continuity and change. Understanding the dynamics of institutional change therefore requires an examination of the interplay of changes in formal institutional rules and how organizations respond to these changes by strategic attempts to promote or hinder further change in institutions. The macro-level political story of institutional change shows a number of paradoxes resulting in unexpected and often incomplete forms of market liberalization shaped by continued support for some core features of Germany's social market economy. The resulting erosion of Germany's co-ordinated model of economic organization through networks and business associations has gone hand-in-hand with the attempts to preserve these institutions for core workers and sectors of the economy in the face of changing environments. The result is a more varied institutional landscape characterized by international diffusion of liberal policies and the politics of their variable re-embedding within a long-term path of institutional continuity.