This article compares variations in the level of unemployment in four small, open economies-Austria, Belgium, the Netherlands, and Sweden. Rather than focusing on the political-institutional differences between these four countries, the article examines international economic variables such as the role of the European Monetary System, the structure of foreign trade, and linkages to international markets to understand the greater deterioration of employment in Belgium and the Netherlands. In turn, the decision to join the European Community and to seek firmer integration into financial markets is attributed to the relatively greater influence of banking capital or the financial sector in the systems of economic policy-making of Belgium and the Netherlands. The article concludes that the detachment of the Austrian and Swedish economies from the European experience in economic integration has greatly helped the Social Democrats in these countries in fulfilling their promises of full employment.
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