Openness, Uncertainty, and Social Spending: Implications for the Globalization— Welfare State Debate

Authors


  • Authors’ note: Authors are listed alphabetically. We thank the editors and two anonymous reviewers for ISQ, Todd Allee, Carew Boulding, Pradeep Chhibber, Rob Franzese, Tim Frye, Claudio Holzner, Amaney Jamal, Heidi Sherman, and Nita Rudra, for their comments and help on various aspects of this article. Previous versions of this article also benefited from audience feedback at the 2007 Annual Meeting of the Midwest Political Science Association, Chicago, and the 2007 General Conference of the European Consortium for Political Research, Pisa, Italy. All errors remain solely our own. To preserve space, we have placed many of the robustness and sensitivity checks that we have conducted in a Web appendix to this article. We note throughout the article what information can be found there. This appendix, and all the files required to replicate our analyses, will be hosted on Irfan Nooruddin’s Web site: http://polisci.osu.edu/faculty/nooruddi/research.htm.

Abstract

We extend the literature on openness and spending in developing countries arguing that the effect of increasing openness depends on both regime type and the level of openness. Democracies respond to increases in openness by increasing spending while dictatorships respond by decreasing spending. However, the degree to which countries pursue the strategy of choice depends on the level of openness. In autarkic countries, an increase in import competition has more severe consequences for perceptions of job insecurity and dislocation. In response, government management of openness will be more vigorous under these conditions regardless of whether the leader increases or decreases spending. Economic selection mechanisms at work will produce an outcome wherein, at higher levels of openness, further import liberalization has smaller effects on perceptions of job insecurity and dislocation. Hence, both the demand and the supply of government management of openness will be lower.

Ancillary