The Central European Manufacturing Core in geoeconomic turmoil: an institutional approach

Abstract The evolution of the Central European Manufacturing Core (CEMC), comprising Germany, Austria, Czechia, Hungary, Poland, Slovakia, and Romania, was a success story from the eastern countries’ capitalist transformation in the 1990s to the 2008 global crisis. However, exogenous geopolitical shocks and demographic and technological processes have challenged this engine of European manufacturing. This paper shows that institutional complementarity, a key element of comparative capitalism, helps explain both the period of stable development and the current challenges in the dynamic interaction between national and international complementarities. This approach can open new avenues for comparative capitalism in studying global value chains or regional economic integrations. In the investigation, the automotive industry serves as a representative case because other sectors cannot offset its output volume in the CEMC. The analysis suggests that some deindustrialization in Germany and the weakening of the CEMC are inevitable. The fundamental reason is the changing geoeconomic landscape, which can accelerate different development paths across East-Central European countries. The diminishing significance of the CEMC affects the power relations within the European Union, which have already shifted because of the weakened German–French tandem and the growing importance of the Nordic countries, the Baltic States, and Poland due to the war in Ukraine.