Welfare spending in an era of globalization: The north-south divide

International Relations

Volumn 23, Issue 1, 2009, Pages 27-50

  Glenn, John ^a  

^a NONE

Author keywords

Capital taxation; Compensatory state; Competitive state; Developing states; Globalization; Industrialized countries; Industrializing states; Welfare spending

Indexed keywords

EID: 62549125032     PISSN: 00471178     EISSN: 17412862     Source Type: Journal    
DOI: 10.1177/0047117808100608     Document Type: Article

References (78)

1. I would like to thank the anonymous reviewers for their insightful comments and the following for their support in writing this paper: Steve Day, Jane Freedman, Rob Frith, Darryl Howlett, Tony McGrew and Nana Poku.
2. This included the UK (1979); Japan (1980); Australia (1983); New Zealand (1984); Netherlands (1986); Denmark (1988); and France (1989). S. Griffith-Jones, R. Gottschalk and X. Cirera, The OECD Experience with Capital Account Liberalisation (Sussex: Institute of Development Studies, 2000), p. 12, available at: www.ids.ac.uk/ids (accessed 17 December 2005).
3. This promotion has occurred on a variety of levels, including: Linking overseas development aid to infrastructure projects that benefit national companies; financial support for joint ventures with foreign companies; helping plan and set up free-trade zones in foreign countries; providing assistance to those companies seeking to relocated overseas. Refer to L. Weiss, The Myth of the Powerless State: Governing the Economy in a Global Era (Cambridge: Polity Press, 1998), pp. 207-8. See also L. Weiss, 'Globalization and the Myth of the Powerless State', New Left Review, 225, 1997, pp. 3-27.
4. P. Cerny, 'Paradoxes of the Competition State: The Dynamics of Political Globalization', Government and Opposition, 32(2), 1997, pp. 260-70. See also P. Cerny, The Changing Architecture of Politics: Structure, Agency, and the Future of the State (London: Age Publications, 1990), especially ch. 8; P. Cerny, 'What Next for the State?', in E. Kofman and G. Youngs, Globalization: Theory and Practice (London: Pinter, 1996), pp. 123-37.
5. G. Garrett, 'Global Markets and National Politics: Collision Course or Virtuous Circle?', International Organization, 52(4), 1998, pp. 787-824; G. Garrett, 'Shrinking States? Globalization and National Autonomy in the OECD', Oxford Development Studies, 26(1), 1998, pp. 71-98; D. Rodrik, Has Globalization Gone too Far? (Washington DC: Institute for International Economics, 1997), p. 64. See also P. Katzenstein, Small States in World Markets: Industrial Policy in Europe (Ithaca, NY: Cornell University Press, 1985), and D. Cameron, 'The Expansion of the Public Economy: A Comparative Analysis', American Political Science Review, 72(4), 1978, pp. 1243-61.
6. Garrett, 'Global Markets and National Politics'; Garrett, 'Shrinking States?'; D. Rodrik, Why Do More Open Economies Have Bigger Governments?, NBER Working Paper Series 5537 (Cambridge, MA: National Bureau of Economic Research, 1996), p. 26.
7. For details on how free trade affects the various sectors of a country, refer to E. Heckscher, 'The Effect of Foreign Trade on the Distribution of Income', in American Economic Association, Readings in the Theory of International Trade (London: Allen and Unwin, 1950), pp. 272-300; B. Ohlin, Interregional and International Trade (Cambridge, MA: Harvard University Press, 1933); J. L. Ford, The Ohlin-Heckscher Theory of the Basis and Effects of Commodity Trade (London: Asia Publishing House, 1965).
8. G. Esping-Andersen, 'After the Golden Age? Welfare Dilemmas in a Global Economy', in G. Esping-Andersen, Welfare States in Transition: National Adaptations in Global Economies (London: Sage Publications, 1996), pp. 1-31; G. Esping-Andersen, The Three Worlds of Welfare Capitalism (Princeton, NJ: Princeton University Press, 1990). See also F. Castles, The Future of the Welfare State: Crisis Myths and Crisis Realities (Oxford: Oxford University Press, 2004); L. Mosely, Global Capital and National Governments (Cambridge: Cambridge University Press, 2003); D. Swank, Global Capital, Political Institutions, and Policy Change in Developed Welfare States (Cambridge: Cambridge University Press, 2002); Garrett, 'Global Markets and National Politics'; Garrett, 'Shrinking States?' See also Katzenstein, Small States in World Markets, and Cameron, 'The Expansion of the Public Economy'.
9. C. Hay, 'Globalization's Impact on States', in J. Ravenhill, Global Political Economy (Oxford: Oxford University Press, 2005), p. 247.
10. Hay, 'Globalization's Impact on States', p. 26.
11. Refer to Heckscher, 'The Effect of Foreign Trade on the Distribution of Income'; Ohlin, Interregional and International Trade; Ford, The Ohlin-Heckscher Theory.
12. Mosely, Global Capital and National Governments; Swank, Global Capital; Garrett, 'Global Markets and National Politics'; Garrett, 'Shrinking States?' See also Katzenstein, Small States in World Markets, and Cameron, 'The Expansion of the Public Economy'.
13. Garrett, 'Global Markets and National Politics', p. 814.
14. Swank, Global Capital, p. 256.
15. Swank, Global Capital, p. 249 and Garrett, 'Global Markets and National Politics', p. 814. See also G. Garrett, 'Capital Mobility, Trade, and the Domestic Politics of Economic Policy', International Organization, 49(4), 1995, 657-87; Mosely, Global Capital.
16. Swank, Global Capital, pp. 277-8; Garrett, 'Global Markets and National Politics'.
17. Garrett, 'Capital Mobility', p. 682.
18. See G. Teeple, Globalization and the Decline of Social Reform (Toronto: Garamond Press, 1995), pp. 150-1.
19. G. Garrett, Partisan Politics in the Global Economy (Cambridge: Cambridge University Press, 1998), p. 133.
20. Garrett, 'Global Markets and National Politics', p. 804. Layna Mosely finds that the premium is even less, with a 10 per cent deficit attracting on average only 0.5 per cent extra, although this seems rather low. Refer to Mosely, Global Capital, p. 85.
21. Garrett, 'Global Markets', p. 791.
22. Garrett, 'Global Markets', p. 801.
23. H. Wilensky, Rich Democracies: Political Economy, Public Policy, and Performance (Berkeley, CA: University of California Press, 2002), p. 654.
24. Wilensky, Rich Democracies, p. 640.
25. W. Cooke and D. Noble, 'Industrial Relations Systems and US Foreign Direct Investment Abroad', British Journal of Industrial Relations, 36(4), 1998, p. 596, and F. Traxler and B. Woiteach, 'Transnational Investment and National Labour Market Regimes: A Case of "Regime Shopping"', European Journal of Industrial Relations, 6(2), 1998, p. 149.
26. Mosely, Global Capital, p. 110.
27. For and excellent overview of this position refer to Hay, 'Globalization's Impact on States'.
28. For example, compare the authors quoted in this section with Cerny, 'Paradoxes of the Competition State'; J. Gray, False Dawn: The Delusions of Global Capitalism (London: Granta Books, 1999); Teeple, Globalization and the Decline of Social Reform; K. Ohmae, The Borderless World: Power and Strategy in the Global Marketplace (London: HarperCollins, 1990).
29. OECD, Economic Outlook 2006 (Paris: OECD, 2006), table 1.4, p. 180.
30. A. Maddison, 'The Nature and Functioning of European Capitalism: A Historical and Comparative Perspective', Banca Nazionale del Lavoro Quarterly Review, 50(203), 1997, pp. 431-79, at p. 438. Also V. Tanzi and L. Schuknecht, 'The Growth of Government and the Reform of the State in Industrial Countries', Working Paper WP/95/130 (Washington DC: IMF, 1995), p. 12.
31. Tanzi and Schuknecht, 'The Growth of Government', pp. 1-39.
32. V. Tanzi, 'Globalization and the Future of Social Protection', IMF Working Paper WP/00/12 (Washington DC: IMF, 2000), p. 9.
33. For example, the so-called 'peace dividend' has meant that UK defence spending declined from £25 billion in 1993-4 to£21 billion in 200-2, which is half what is spent on health. Refer to J. Hills, 'Thatcherism, New Labour and the Welfare State', CASE Paper 13 (London: LSE, 1998), p. 25, available at: http://sticerd.lse.ac.uk/dps/de/ dedps37.pdf (accessed 23 January 2008). G. Esping-Andersen, 'Welfare States without Work: The Impasse of Labour Shedding and Familialism in Continental European Social Policy', in Esping-Andersen, Welfare States in Transition, p. 73.
34. Esping-Andersen, The Three Worlds of Welfare Capitalism, p. 118. Also cited in C. Pierson, Beyond The Welfare State: The New Political Economy of Welfare (Cambridge: Polity Press, 1998), p. 173.
35. Hills, 'Thatcherism, New Labour and the Welfare State', p. 12.
36. M. Rhodes, 'The Welfare State: Internal Challenges, External Constraints', in M. Rhodes, P. Heywood and V. Wright (eds), Developments in West European Politics (Basingstoke: Macmillan, 1997), pp. 71-3.
37. F. Scharpf, 'Economic Integration, Democracy and the Welfare State', Journal of European Public Policy, 4(1), 1997, p. 26.
38. 'In the Shadow of Prosperity', The Economist, 20-26 January 2007, pp. 28-30.
39. Refer to the European Employment Strategy Online, available at: http://ec.europa.eu/employment_social/employment_strategy/index_en.htm (accessed 4 March 2008).
40. ECLAC, Social Panorama of Latin America 2005, available at: www.eclac.org/publicaciones/xml/4/24054/PSI2005_Cap2_GastoSocial.pdf (accessed 2 March 2008).
41. N. Rudra, 'Globalization and the Decline of the Welfare State in Less-Developed Countries', International Organization, 56(2), 2002, p. 411.
42. N. Poku, 'HIV/AIDS in a Globalized World: An Uneven Pandemic in an Unequal World', in A. McGrew and N. Poku, Globalization, Development and Human Security (Cambridge: Polity Press, 2007), pp. 152-70.
43. Figures available at: www.unaids.org/en/Regions_Countries/Regions/ SubSaharanAfrica.asp (accessed 2 May 2007).
44. C. Johnson, MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925-1975 (Stanford, CA: Stanford University Press, 1982); M. Woo-Cumings, The Developmental State (Ithaca, NY: Cornell University Press, 1999); J. Woo, Race to the Swift: State and Finance in Korean Industrialization (Ithaca, NY: Columbia University Press, 1991); and R. Wade, Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization (Princeton, NJ: Princeton University Press, 1990).
45. In fact, Singapore and Hong Kong have 'provided the world's largest public housing systems... which have served to subsidize wages'. R. Appelbaum and J. Henderson, States and Development in the Asian Pacific Rim (Newbury Park, CA: Sage Publications, 1992), p. 22.
46. P. Chow, Social Expenditures in Taiwan (Washington DC: World Bank, 2001), p. 5.
47. P. Lloyd-Sherlock, 'Failing The Needy: Public Social Spending in Latin America', Journal of International Development, 12, 2000, pp. 101-19, at p. 103
48. Lloyd-Sherlock, 'Failing The Needy', p. 108.
49. ECLAC, Social Panorama of Latin America 2002, available at: www.eclac.org/publicaciones/xml/6/15086/Summary2003ing.pdf (accessed 21 November 2008).
50. ECLAC, Social Panorama of Latin America 2002, p. 176.
51. All quotes from F. Stewart and A. Berry, 'Globalization, Liberalization, and Inequality: Expectations and Experience', in A. Hurrell and N. Woods, Inequality, Globalization, and World Politics (Oxford: Oxford University Press, 1999), p. 167.
52. Stewart and Berry, 'Globalization, Liberalization, and Inequality', p. 167.
53. J. Adésinà, Social Policy and the Quest for Inclusive Development: Research Findings from Sub-Saharan Africa, Social Policy and Development Programme Paper no. 33 (Geneva: UNRISD, 2007), p. 12.
54. All quotes and information from Adésià, Social Policy and the Quest for Inclusive Development, pp. 12-15.
55. Mosely, Global Capital, p. 110.
56. Mosely, Global Capital, p. 111.
57. Mosely, Global Capital, p. 116.
58. Mosely, Global Capital, pp. 114-5.
59. Mosely, Global Capital, pp. 128, 148.
60. Cooke and Noble, 'Industrial Relations Systems', p. 596.
61. Cooke and Noble, 'Industrial Relations Systems', p. 603.
62. UNCTAD, World Investment Report 2004: The Shift Towards Services (New York: United Nations Conference on Trade and Development, 2004), table B.3.
63. Rudra, 'Globalization and the Decline of the Welfare State', p. 421, and J. Stiglitz and A. Charlton, Fair Trade For All: How Trade Can Promote Development (Oxford: Oxford University Press, 2005).
64. Rudra, 'Globalization and the Decline of the Welfare State', p. 420.
65. E. Lora and M. Olivera, Public Debt and Social Expenditure: Friends or Foes? (Washington DC: Inter-American Bank, 2006), p. 15.
66. F. Cheru, 'The Heavily Indebted Poor Countries (HIPC) Initiative: Old Wine in a New Bottle?', in McGrew and Poku, Globalization, Development and Human Security, p. 76.
67. As Caroline Thomas points out, although the term 'structural adjustment' was used to describe such reforms there were in fact several discrete stages associated with this process: Stabilization, structural adjustment and export-led growth. Refer to C. Thomas, 'Globalization and Development in the South', in Ravenhill, Global Political Economy, pp. 317-43.
68. Stewart and Berry, 'Globalization, Liberalization, and Inequality', pp. 150-1.
69. G. Mohan, 'Globalisation and Governance: The Paradoxes of Adjustment in Sub-Saharan Africa', in Kofman and Youngs, Globalization: Theory and Practice, p. 292.
70. Cerny, 'Paradoxes of the Competition State', p. 260; See also Cerny, The Changing Architecture of Politics, especially ch. 8.; Cerny, 'What Next for the State?'
71. Swank, Global Capital, p. 279.
72. R. Kaufman and A. Segura-Ubiergo, 'Globalization, Domestic Politics, and Social Spending in Latin America: A Time-Series Cross Section Analysis, 1973-97', World Politics, 53, 2001, pp. 553-87, and N. Rudra and S. Haggard, 'Globalization, Democracy, and Effective Welfare Spending in the Developing World', Comparative Political Studies, 38(9), 2005, p. 1041.
73. 73 D. Stasavage, 'Democracy and Education Spending: Has Africa's Move to Multiparty Elections Made a Difference for Policy?', available at: http://as.nyu.edu/docs/IO/5395/AJPS2005.pdf (accessed 3 March 2008).
74. 74 B. Ames, 'The Politics of Public Spending in Latin America', American Journal of Political Science, 21(1), 1977, p. 152.
75. Lora and Olivera, Public Debt and Social Expenditure, p. 15.
76. Kaufman and Segura-Ubiergo, 'Globalization, Domestic Politics, and Social Spending in Latin America', p. 554, and A. Segura-Ubiergo, The Political Economy of the Welfare State in Latin America: Globalization, Democracy, and Development (Cambridge: Cambridge University Press, 2007), p. 5; G. Avelino and D. Brown, 'Globalization, Democracy, and Social Spending in Latin America, 1980-1997', available at: www.colorado.edu/IBS/PEC/gadconf/papers/avelino_brown_hunter.pdf (accessed 3 March 2008).
77. Lora and Olivera, Public Debt and Social Expenditure.
78. This has been exacerbated by the Basel II Accord which assigns separate sovereign ratings to each country.