A Study of Institutional Change within the Romanian National Political Economy with a Focus on Elites, International Forces and Labour By Ioana Jipa-Muşat Submitted to Queen Mary University of London Department of Business and Management Submitted in partial fulfillment of the requirements of the Degree of Doctor of Philosophy Supervisors: Dr. Liam Campling Dr. Martha Prevezer Programme of Study: 2015-2019 1 Required statement of originality for inclusion in research degree thesis I, Ioana Jipa-Muşat, confirm that the research included within this thesis is my own work or that where it has been carried out in collaboration with, or supported by others, that this is duly acknowledged below and my contribution indicated. Previously published material is also acknowledged below. I attest that I have exercised reasonable care to ensure that the work is original, and does not to the best of my knowledge break any UK law, infringe any third party’s copyright or other Intellectual Property Right, or contain any confidential material. I accept that the College has the right to use plagiarism detection software to check the electronic version of the thesis. I confirm that this thesis has not been previously submitted for the award of a degree by this or any other university. The copyright of this thesis rests with the author and no quotation from it or information derived from it may be published without the prior written consent of the author. X Ioana Jipa-Muşat Date: 2 Abstract Recognised shortcomings of the comparative political economy literature are its relatively static analysis and general bypassing of context-specific explanatory variables. The last 20 years of changes in the structural configuration of national varieties of capitalism have made it increasingly apparent that the comparative political economy literature has conceptual problems in relation to its ability to account for institutional change. This study seeks to provide an explanation for institutional change in Romania, by challenging and stepping away from the traditional elements of change of the comparative political economy literature. I revisit the question of the institutional transformation of a post-Socialist Central Eastern European (CEE) state, making the case for a more dynamic, relational, historically-based, context-specific and agent- driven analysis of institutional change. Drawing on five overarching literatures – varieties of capitalism, Polanyian varieties, economic geography, historical institutionalism and class analysis of elites – my thesis hypothesises the existence of elites, international forces and labour as the principal drivers of institutional change in Romania. In order to examine the unfolding of my approach to the study of institutional change, I designed a longitudinal comparative case study based on the examination of three Romanian sectors with distinct configurations in terms of their historical legacies, spatial and temporal vectors, and structure and composition. The three sectoral economies analysed in my thesis are 1) coal mining – an inward-oriented industrial branch representative of the Socialist regime, 2) auto – an industrial branch established in the Socialist regime with continuity in the newly-established capitalist variety through foreign direct investment, and 3) business services – an industrial branch created in the early 2000s through the inflow of foreign direct investment. The motivation behind implementing a case study was to generate an in-depth and extensive understanding regarding the processes of institutional formation and institutional change in the context of CEE through the utilisation of the Romanian national variety. I used a combination of 38 in-depth semi-structured interviews, archival research and newspaper articles and technical reports. My findings establish that the dominant elites have captured the Romanian state and its institutional configuration, and in the process, influenced institutional change across the different sectoral economies. My evidence shows that the dominant elites do not exist in a vacuum; instead, these social agents are situated within the institutional setting alongside other categories of actors with diverging roles and positionalities. International forces act as a force of change with which the domestic elites engage and interact triggering institutional change and transformation across the different spatial scales of the national political economy. More precisely, the presence of FDI produced variations in regional restructuring, driving path destruction (de-industrialisation and de-skilling) in coal mining, path re-construction (industrial upgrading and re- organisation) in auto and path creation in business services within the wider Romanian national variety of capitalism over time. The labour class can also act as a force of change with which the dominant elites engage and interact within the institutional context. However, the picture of labour is institutionally variegated across the different 3 spatial scales of the political economy, with some sectors such as coal mining and auto exhibiting a strong and coordinated labour model, whereas other sectors such as business services are characterised by a deregulated labour market model typical of liberal market varieties. Thus, labour can be driver of institutional change, although not as powerful as elites and international forces. My findings extend the emergent theory on the CEE region, as well as refine and add on to the existing body of knowledge regarding the Romanian national variety since its institutional framework is distinct and does not fully replicate the institutional configuration of the other CEE political economies. Furthermore, my findings recognise the importance of breaking the institutional structure into different spatial scales, as this allows us to zoom in on the different spatial configurations – the micro, meso, macro and international – at certain moments in time. At the same time, by conceptualising the institutional setting relationally, we can monitor and assess the different types of exchanges between the existing spatial scales and consequently, measure how they influence institutional change across the various dimensions of the national political economy. 4 Acknowledgements Throughout the writing of my thesis, I have received a great deal of invaluable support and guidance. I would first like to thank my supervisors, Dr. Liam Campling and Dr. Martha Prevezer, whose expertise was indispensable in the undertaking of the entire research process. I have been extremely lucky to have two supervisors who not only cared so much about my work, but also about my physical and mental health throughout the entire length of the doctoral programme. I would also like to thank Queen Mary University of London for awarding me the QMUL research studentship, financial aid without which I would have not been able to complete this study programme. Furthermore, I am very grateful for the internal opportunities the University has offered me – more specifically, the possibility to attend the various interdisciplinary training courses, as well as the Teaching Associate position I was granted since my second year of the PhD. I would like to acknowledge my colleagues from the Business and Management PhD department. I would particularly like to single out Emily Pfefer and Mohammed Kasbar, who contributed so thoroughly through their comments and emotional support during times of need. I would like to thank all the people that have participated in my research – gatekeepers, interviewees and National Archives custodians. Without your advice and cooperation, I would have not been able to find the answers that I was looking for and ultimately, make this contribution to social science. In addition, I would like to thank my parents for their wise counsel and sympathetic ear. You have been and are always there for me. Very importantly, there are my friends, who were of great support in helping me deal with the many PhD-related issues, as well as providing happy distraction to rest my mind outside of my research. I would like to mention the following: Andrei Muşat, Cassandra Kendall, Christopher Edgar, Daniel Zvarici, Dragana Radovan, Flavius Bălan, Katerina Vafe, Marica Spangar, Shamitha Ranasinghege and Vladimir Sas. Finally, I would like to acknowledge my pet Bob for the companionship and comfort offered during the research and writing process. 5 Table of Contents Required statement of originality for inclusion in research degree thesis ........................ 2 Abstract ............................................................................................................................. 3 Acknowledgements ........................................................................................................... 5 List of Boxes ................................................................................................................... 11 List of Figures ................................................................................................................. 12 List of Maps .................................................................................................................... 13 List of Tables................................................................................................................... 14 List of Abbreviations....................................................................................................... 16 Chapter 1 Introduction ...................................................................................................