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

Published online by Cambridge University Press:  09 July 2003

Nita Rudra

Abstract

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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.

Type
Research Article
Information
International Organization , Volume 56 , Issue 2 , Spring 2002 , pp. 411 - 445
Copyright
Copyright © The IO Foundation 2002

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