As we have seen in our discussion of national variations in the welfare state and equality, as well as differences in energy policy and performance, types of political economy shape national responses to common global challenges, such as oil shocks and environmental degradation. These national variations can also provide an answer to the puzzle that corporatist big spenders on average have done better or as well as the fragmented decentralized lean spenders in economic performance; they have also flexibly adapted to external shocks (see Tables 3 and 4). The puzzle is solved by the trade-offs facilitated by both social spending and the national bargaining patterns institutionalized in the more consensual democracies.

Figure 2 shows the causal model I used for regression analysis of economic performance. It singles out one of the three types of bargaining arrangements among major economic and political actors without reference to the five types in Table 1, using numerical scores instead. The inverse of the policies and outcomes in Figure 1 are typical of the confrontational systems of the fragmented and decentralized political economies.