Perhaps the most defining characteristic of the global economy today is the rise of Emerging Market Economies (EMEs). Their success raises important issues about the distribution of global monetary and fiscal power at the international level. And as the EMEs have gained importance, their influence has grown across a range of policy domains. Despite this, the EMEs vary quite dramatically in terms of their social, political and economic goals. How, then, can we best account for the variations we find among the EMEs? This dissertation will explore the argument that the variation in outcomes we find among the EMEs is due to the type of economic institutions prevalent in their economies. In short, it is the variety of capitalism that produces this variation.

To better understand how variations in capitalism may influence important outcomes, this dissertation focuses on a sample of 31 EMEs to show that national variations in economic institutions are central to explaining why carbon market formation has been more successful in some countries than in others. My analysis draws on variables from the Varieties of Capitalism literature, along with four control variables, including: macroeconomic stability, infrastructure, public institutions, and population. To analyze the data, I employ both regression and QCA methods as rival tools for explaining these outcomes. Together, these variables are used to explain what type of capitalism produced successful or unsuccessful market formation under the Clean Development Mechanism (CDM).

My research suggests that although economic institutions do play a central part in determining CDM market creation, macroeconomic stability and high population levels may also matter. Also, success in forming CDM markets cannot be determined by the level of development alone. In fact, in this case, the variety of capitalism in each country was found to produce measurable effects on the success of carbon markets there. If specific types of capitalism require differing forms of motivation to bring about the desired policy outcome, current efforts to address climate change may need to adapt. Findings such as these help to provide new insights into how best to design and implement policies across a wide range of issues.