The three economic models – Anglo-Saxon, Rhine capitalism and East Asian – all have strong cultural characteristics and have immensely benefitted the local economies where they originated from. However, the best practices from each of the models were soon adopted by other parts of the worlds, chiefly underdeveloped countries at the time.

You're lucky! Use promo "samples20"
and get a custom paper on
"Comparative Economic Systems"
with 20% discount!
Order Now

The first two models – Anglo-Saxon and the Rhineland – are older models as compared to the Asian economic model. The basic difference between the two models is that Anglo-Saxon model is a shareholder economy, while Rhineland model is a stakeholder economy. (Betts, 2009) Both these models are believed to be different forms of capitalism. The Anglo-Saxon model is seen in countries like UK and US, while the Rhineland model is practiced by several countries in Europe, notably Germany and Sweden. Both Anglo-Saxon and Rhineland models accept free-trade, autonomous monetary policy, and product pricing based on a free market. However, the Anglo-Saxon model attempts to address market failures by providing extra elements of the market that might be missing like patents, pollution permits that can be traded etc. i.e. it depends on on market coordination. In contrast, the Rhineland model depends on non-market coordination and supplements the economy by a generous system of welfare protection. For this reason, this type of model is also sometimes referred to as the welfare economy. (Bronk, 2000)

The Asian economic model is hard to discern because it is practiced in so many different forms. This type of model is generally seen in Asian countries like China, India, and to some extent Japan. Some common characteristics shared by the countries’ economic systems are a greater level of willingness to have a major chunk of domestic banking under public sector ownership. Further, the government and central bank of these countries has a much greater influence in deciding the lending rates and amounts to the private sectors and even the distribution of the lending across different sectors.

Defenders of both Anglo-Saxon and Rhineland models believer that a large influence from the public sector, especially direct intervention leads to inefficiency in terms of allocations to the right institutions and sectors. It is also said to increase the quantity of non-performing lending and eventually leads to more corruption. (Goodhart, 2010) The economies of developing countries show all these characteristics. However, the Anglo-Saxon and Rhineland models depend a lot on short-term profit, which was a major reason of the recent banking crisis. Rhineland models suffers more because of the demanding social welfare segment. (Betts, 2009)

  • Betts, P. (2009, June 3). Rhineland’s robust model faces its toughest test yet. Retrieved October 20, 2014, from Financial Times Web site:
  • Bronk, R. (2000). Which model of capitalism? OECD Observer, pp. 12-15. Retrieved October 20, 2014, from OECD Observer Website:
  • Goodhart, C. A. (2010). Banks and public sector authorities: the international financial crisis and policy challenges in Asia-Pacific. BIS, Monetary and Economic Department. Retrieved October 20, 2014, from