The globalisation–welfare state nexus: Evidence from Asia

Abstract

How globalisation influences social expenditure has been examined for industrialised countries. Globalisation has often been shown to be positively associated with social expenditure in established industrialised countries, a finding that corroborates the compensation hypothesis. Scholars have focused on industrialised countries, because social expenditure is difficult to measure in developing countries. I use new data on social expenditure for Asian non‐OECD countries. Globalisation is measured by the new KOF Globalisation Index. My results do not suggest that globalisation influenced social expenditures in Asia. Neither do the results suggest that the nexus between globalisation and social expenditures varied across high‐income countries, such as Hong Kong and Singapore, and lower‐income Asian countries or across Asian regions. It is conceivable that Asian citizens did not demand increasing social support when globalisation proceeded rapidly because they enjoyed family and other private assistance. Asian countries also have weaker tax and labour market institutions than OECD countries and have therefore more difficulties in increasing social expenditure.

Globalisation, Welfare Models and Social Expenditure in OECD Countries

“…The control variables included in vector in Eq. ( 1 ) were selected based on previous empirical studies, Schulze and Ursprung ( 1999 ); Meinhard and Potrafke ( 2012 ); Potrafke ( 2019 ); Anderson and Obeng ( 2021 ); Haelg et al ( 2020 ), but mostly taking into account the studies that deal with the mediating role of welfare models, Kim and Zurlo ( 2009 ); Leibrecht et al ( 2011 ); Onaran and Boesch ( 2014 ) and Yay and Aksoy ( 2018 ). Table 2 identifies the control variables considered in the former studies.…”

Do types of foreign capital matter for income equality?

“…The KOF index was revised by Gozgor (2018). Using the revised KOF index, the role of globalisation is examined in explaining a wide range of economic issues such as economic growth (Gozgor, 2018), taxation (Jha & Gozgor, 2019) and social expenditures (Potrafke, 2019).…”

Dimensions of globalisation and social welfare policies in Organisation for Economic Co-operation and Development countries

“…Does globalisation influence social expenditure? The literature predicts that globalisation can either lead to a retrenchment or an expansion of the welfare state (Koster, 2009; Ursprung, 2008), but only recently has it tried to isolate the effect of the various manifestations of globalisation (Potrafke, 2019; Yay & Aksoy, 2018). Globalisation has often been blamed for the decrease in social expenditure, at least in the public discourse and among the general public, and in particular economic globalisation.…”