The Prevalence of Path Dependency

Abstract Convergence and path dependency are competing hypotheses for explaining the institutional developments and their effects on performance, through views on the interplay of markets, institutional change, and performance. Path dependency may result from the existence of functional equivalents that allow countries to adapt to various market pressures or from institutional lock-ins that deter such pressures. Path dependency occurs when the distinct dimensions of labour relations co-vary in their level or organization. This chapter presents findings regarding the effect of the distinct dimensions of labour relations on development and performance which can aid in a better understanding of how path dependency is related to economic internationalization.