Globalization and the Decline of the Welfare State in Less-Developed Countries

2002/01/01 by Nita Rudra · 1 citation
Social Sciences · Economics, Econometrics and Finance · #Social Policy and Reform Studies #Gender, Labor, and Family Dynamics #Taxation and Compliance Studies

paper · pdf · doi:10.1162/002081802320005522

openalex publication_date 2002/01/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/04

Abstract

Why have trends in government welfare spending in developing countries diverged from those in developed countries? I address this question by investigating the effects of capital and trade flows on government welfare spending in fifty-three developing countries. Using an original measure of labor power in developing countries, I test the links between international markets, labor's political strength, and the welfare state. I argue that labor's collective-action problems, caused by large populations of low-skilled and surplus workers, offset labor's potential political gains from globalization. I show that when the proportion of low-skilled workers in a nation is high, globalization will lead to a decline in welfare spending. Most significantly, the results suggest that in nations where labor-market institutions are not yet well developed, government social-welfare spending is constrained by international market, forces.

Citations

• The Expansion of the Public Economy: A Comparative Analysis
• International regimes, transactions, and change: embedded liberalism in the postwar economic order
• The Eclipse of the State? Reflections on Stateness in an Era of Globalization
• Politics, Institutions, and Welfare Spending in Industrialized Democracies, 1960–82
• Has Globalization Gone Too Far?
• The New Politics of the Welfare State

Cited by

• Race to the bottom [wikipedia]