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Protecting Jobs in the Age of Globalization: Examining the Relative Salience of Social Welfare and Industrial Subsidies in OECD Countries

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Abstract

The relationship between economic openness and welfare policies has become increasingly important to policy makers. While scholars have tended to examine conditions under which budgets for social welfare programs ebb and flow along with countries' exposure to trade, they have overlooked how governments may compensate domestic labor by subsidizing their employers. To explicitly address the issue of instrument choice, we examine the relative salience of social welfare expenditures to industrial subsidies in a panel of 16 OECD countries from 1980 to 1995. Our results suggest that the relative budgetary salience of social welfare to industrial subsidies is influenced by the interplay between governmental partisan gravity and changes in imports. Unlike Right governments, Left governments tend to favor indirect compensation via industrial subsidies in the wake of negative, zero or moderate increases in imports. Faced with sharp increases in imports, Left governments switch their preferences to compensating workers via more direct and visible policies, namely social welfare.

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... In addition, to improve the quality of labor skills and productivity, governments may increase social spending on education in response to the threat of international competition (Kaufman and Segura-Ubiergo 2001). To explore variations in compensation policies across countries, the literature on compensation politics has examined competition-relevant factors such as the level of import or trade openness (Hays et al. 2005;Nooruddin and Simmons 2009) and the size and depth of markets (Down 2007), supply-side factors such as government partisanship and regime type (Avelino, Brown and Hunter 2005;Rudra and Haggard 2005;Nooruddin and Simmons 2009), demand-side factors such as the power of the left and labor unions (Garrett 1995(Garrett , 1998Rudra 2002), or a mix of these factors (Cao et al. 2007;Hays 2009). ...
... One possible explanation for the reason why previous studies tend to overlook the importance of examining the collective relationship between economic globalization, factor mobility, and compensation policies comes from the suspicion that factor mobility may not matter too much in practice. Cao et al. (2007) argue that, even though globalization generates complaints along sectoral lines due to low factor mobility, capital owners may also have an incentive to support social welfare spending. This is because welfare spending can bring benefits to workers in their own sectors to some extent and thus provide capital owners more freedom to restructure firms. ...
... Leftist parties generally prefer policies that redistribute wealth and reduce inequality, while rightist parties favor policies that maintain low inflation and low taxation (Hibbs 1977). For instance, Cao et al. (2007) claim that the interplay between government partisanship and changes in imports affects the relative budgetary salience of social welfare over industrial subsidies. They show that left-wing governments are likely to favor social welfare over subsidies as an effective tool of compensation policies if the level of imports is relatively high. ...
Article
This paper examines the relationship between economic globalization, factor mobility, government partisanship, and the relative budgetary salience of two different instruments of compensation policies: social welfare spending and industrial subsidy provision. While welfare spending directly benefits labor, industrial subsidies benefit both capital owners and labor along the sectoral line. Based on both factoral and sectoral models of trade, we theoretically argue and empirically show that governments are more likely to use welfare politics as compensation policies if free trade generates class-based interests in the society, and subsidy politics if trade openness promotes industry-based interests. We also argue that the interactions of the three variables are contingent on government partisanship. When non-class-based interests are salient as a consequence of trade openness, left-wing governments are likely to focus on welfare politics while right-wing governments favor provision of subsidies. However, when class-based interests are salient, even right-wing governments behave similarly to left-wing governments, favoring welfare spending over subsidies as the key compensation policy. In the analysis of compensation policies in the OECD countries between 1980 and 2001, the test results confirm our expectations.
... There is growing evidence that electoral institutions systematically shape the incentives of politicians to provide distributive policies (e.g. Persson and Tabellini 1999, 2000, 2004Milesi-Ferretti et al. 2002;Hallerberg and Marier 2004;McGillivray 2004;Cao et al. 2007;Edwards and Thames 2007;Chang 2008;Zahariadis 2010;Rickard 2012aRickard , 2012bFranchino and Mainenti 2013; see also Carey and Hix 2013). In this article, we argue that these institutions also influence the propensity to comply with international laws. ...
... Many of these works solely distinguish, with some coding differences, between single-member district and other systems (e.g. Persson andTabellini 2003, 2004;Cao et al. 2007;Chang 2008;cf. Rickard 2012acf. ...
... Lizzeri and Persico (2001),Milesi-Ferretti et al. (2002) andMcGillivray (2004) produced models with similar conclusions.3Persson and Tabellini (2003, 169-179, 2004) found more spending on broad (public goodlike) entitlement programmes, such as employment insurance, in countries with proportional representation electoral systems but no direct evidence of more distributive spending in countries with majoritarian systems.Milesi-Ferretti et al. (2002),Cao et al. (2007) andZahariadis (2010) also failed to find direct corroborating evidence.Zahariadis (2005) showed that higher electoral competition leads to more spending on (general and sectoral) aid if there is a trade deficit, and to less spending if trade is balanced. His measure of competition ignored electoral institutions, however.6 ...
Article
Electoral institutions shape the incentives of governments to rely on distributive measures and to comply with international obligations because of the misalignment they may engender between the collective objectives of a government party and the individual objectives of its members in the legislature. We use this argument to explain the puzzle of unlawful state aid measures in the European Union (EU). Existing theories of EU compliance and implementation offer no convincing explanation to their persistence and patterns. Using data from 2000 to 2012, we find that an increase of district magnitude improves compliance. However, compliance decreases with higher magnitude where either party leaders have no control over the ballot rank or other electoral rules strengthen the incentives to search for a personal vote. We also provide evidence for the effects of electoral reforms on compliance. These results have implications for the broader literature on compliance with international regimes.
... Producer subsidies, training subsidies, in-work subsidies, regulatory changes and tax breaks may all be utilised as part of a strategy to tackle the threat of unemployment, but the effects on employees, local communities and businesses could vary widely. The problem is that social policy research often fails to sufficiently examine how and why powerful actors and the prevailing economic and social challenges, as well as political institutional challenges, shape the choice of policy instrument (see also Cao et al, 2007). ...
... This includes the negative impact of individual businesses and also the impact of endogenous macro and international economic factors. As Ruggie (1982) and Cao et al (2007) point out, policy responses are necessary to mediate the effects of international trade or the liberation of capital markets, but the actual policy instruments that are selected can vary widely. Although increased trade and globalisation may bring positive benefits for an economy overall, and some global businesses, they also bring risks to national industries, regions and citizenry. ...
... Governmental budgets invariable operate under some type of constrain (Cao et al. 2007). In developing countries, budget constraints may be particularly tight because poor countries tend to have limited access to capital markets and more significant incentives to balance their budgets (Wibbels 2006). ...
... Government ideology appears to have no direct effect on social welfare or sector spending shares. This may be because the type of compensation preferred by left governments is conditional on the magnitude of increases in trade openness, as suggested by Cao et al. (2007). Democracy has no systematic effect on the allocation of resources across the two fiscal compensation mechanisms. ...
Article
Governments can compensate citizens for the costs of trade openness using social welfare spending. Alternatively, they could protect citizens via sector spending. Governments facing tight budget constrains will tend to prioritize sector-specific spending. Sector spending programs make the best use of government's limited fiscal resources by protecting politically powerful constituents from the costs of openness. Spending data for 44 developing countries from 1981 to 1997 show that governments tend to reduce the share of expenditures devoted to social welfare programs following trade liberalization. Some of the monies cut from social welfare programs are used to fund more generous sector programs.
... First, government ideology appears to have no direct effect on social welfare or sector spending shares. This may be because the type of compensation preferred by left governments is conditional on the magnitude of increases in trade openness, as suggested by Cao et al. (2007). Second, the dependency ratio affects social welfare budget shares but not sector spending shares. ...
... These two competing effects might wash each other out resulting in the nonfinding reported here. Then again, it may simply be naive to expect factor mobility to influence the government's choice of compensation mechanism, as argued by Cao et al. (2007). Another possible explanation for the reduction in social welfare spending shares in developing countries may be conditions imposed in exchange for IMF loans. ...
Article
This paper examines a fundamental question about the effects of globalization on national governments' autonomy. Recent theories suggest that globalization puts pressure on governments to cut spending. Empirical studies have found evidence of this with respect to social welfare spending in developing countries. However, these studies leave open the possibility that globalization has different effects on different types of spending. It may be the case that governments cut spending on some programs, such as social welfare, but maintain or even increase spending on other programs in response to political pressures. To address this possibility, we analyze spending on both social welfare programs and sector-specific programs, such as subsidies and grants, in 44 developing countries from 1981 to 1997. We find, as previous studies do, that trade openness reduces social welfare spending in developing countries. However, sector spending increases in response to greater trade flows. The implication is that governments in developing countries have at least some capacity to manage the pressures of globalization.
... Cao et al (2007) argue that some types of government prefer to provide compensation indirectly through industrial subsidies. ...
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The political economy of trade literature argues that compensating those who lose from trade is an important component of maintaining public support for free trade, a linkage known as the compensation hypothesis or embedded liberalism thesis. Previous research has found support for many elements of the causal chain underlying embedded liberalism; however, there has been little research on the most crucial element of the causal chain, namely that compensation policies lead to increased support for trade. This article provides a direct test of the compensation hypothesis using a survey-based experiment conducted in the United States that exposes half of the respondents to knowledge of compensation programs and then asks for their opinion on trade policy. The article explores whether knowledge of compensation increases support for trade as well as who is influenced by this knowledge and, thus, provides a crucial test of the embedded liberalism thesis.
... A logistic regression is then estimated where, in addition to covariates, the Euclidean distance between each node and each other node is controlled for. Since its development, the latent space approach has since been applied to international conflict (Ward, Siverson and Cao 2007) and rather extensively to trade, job protection and international political economy generally (Cao, Prakash and Ward 2007; Ward and Hoff 2007; Ahlquist and Ward 2009). ...
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... We lag spatial effects by one year to avoid simultaneity bias in the estimation of spatial models (Beck, Gleditsch, and Beardsley 2006). The assumption here is whatever happened in countries that are closely connected to country i connections defined by ties of FDI, trade, common language, and shared borders, it takes a time lag (often a year) to affect the outcome in country i an assumption commonly accepted in the study of policy diffusion and neighborhood effects on policy choices (Lee and Strang 2006, Elkins, Guzman and Simmons 2006, Swank 2006, Cao, Prakash and Ward 2007. In some cases, the labor practices of their overseas subsidiaries might even be inferior to the ones required by host country regulations. ...
... More and more complicated interdependencies can be captured by increasing the dimensionality of the latent space. Since its development, the latent space model has come to be well used in international relations (Ward, Siverson and Cao 2007;Cao, Prakash and Ward 2007;Ward and Hoff 2007;Ahlquist and Ward 2009). ...
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The multifaceted and strategic interactions inherent in the formation of international military pacts render the alliance decisions of states highly interdependent. Our aim here is to model the network of alliances in such a way as to capture the effects of covariates and account for the complex dependencies inherent in the network. Regression analysis, due to its foundational assumption of conditional independence, cannot be used to analyze alliance decisions specifically and interdependent decisions generally. We demonstrate how alliance decisions are interdependent and define the problems associated with the regression analysis of nonindependent dyads. We then show that alliances can naturally be conceived of as constituting a network, where alliance formation is an inherently interdependent process. We proceed by introducing the exponential random graph model for analyzing interdependence in the alliance network and estimating the effect of covariates on alliances.
... During economic boom times, unemployment benefits may appear to be less important (at least to employers). Social provision may also help to fulfil wider social objectives by boosting incomes and thus encouraging companies to invest in long-term staff development and training (Cao et al., 2007: 301–27). Education and training programmes can increase employee productivity and reduce the risks associated with freeloading (where firms can poach staff from companies that have invested in expensive training programmes). ...
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One of the consequences of the post-2008 global economic crisis is that it has thrust into the public spotlight the issue of state provision for corporations, putting paid to the myth that capitalism and businesses could ultimately be more profitable, more efficient and more competitive without state interference and direct support. The reality is that corporations of every size and within every sector depend on government support in some way. Hence, while the measures taken by governments in response to the global crisis have been exceptional in their scale, they are not exceptional by design. Rather, direct and indirect state support to corporations – referred to here as corporate welfare – is commonplace and is deeply embedded within the state's operations with various forms of assistance being delivered through social policies. In such an environment, the fact that social policy has very little to say about ‘corporate welfare’ is a serious omission. Bringing corporate welfare into social policy analysis reinforces the potential defence of the welfare state and, at the same time, increases our understanding of how best to balance the needs of private businesses with those of citizens on the one hand, and the burden of paying for welfare on the other. To this end, this paper argues for a deeper recognition, understanding, consideration and embedding of corporate welfare in social policy analysis. The first half of the paper advances conceptually the analysis of corporate welfare, mapping corporate and social welfare along a continuum. The second half provides some empirical evidence of the relative size of corporate and social welfare provision in a number of OECD countries.
... For instance, the " convergence " theory argues that capital mobility makes left-leaning economic policies, such as unemployment and welfare, harder to maintain. See Garrett (1998) for a critical assessment of this theory and Cao et al (2007) As described above, most theories of trade policy preferences assume a single dimension ranging from protectionist to free trade with an individual's location on that dimension determined by the anticipated effect of increased trade on their employment prospects and expected income. If increased trade is expected to reduce employment or income, the individual is more likely to support protection; if increased trade is expected to increase employment or income, the individual is more likely to support free trade. ...
Article
The embedded liberalism thesis, a major component of the trade policy literature in political science, argues that governments can build support for free trade by compensating economically those hurt by trade, usually with welfare or education policies. This strategy depends, though, on opposition to trade being driven by employment factors, such as job or income loss because of increased competition. The current fair trade movement raises many non-employment criticisms of trade such as concerns about the environment and labor standards but the literature tends to treat these concerns as traditional protectionism in disguise. This article argues, instead, that for many, these concerns are sincere and that this presents a growing challenge to the compromise of embedded liberalism. The article demonstrates this by examining survey data in the United States and showing that those who support fair trade tend to have characteristics that are opposite those who support economic protection.
... Most sceptical as regards EU impact, Zahariadis (2002: 296) deduces from his comparison of State aid expenditures in EU Member and non-Member countries in the early 1990s that increasing trade linkages rather than formal EU membership explain State aid discipline. Other accounts of State aid expenditure focus on socio-economic and party political factors such as high levels of unemployment (Blais 1986), leftist governments (Zahariadis 1997;Cao et al. 2007), or political pathologies such as weak governments and lack of transparency (Neven and Röller 2000). Yet, these accounts hardly explain the long-term trends observed within the EU. ...
... This pattern perhaps reflects the former's stronger social ties with his cabinet members (prior to their appointments) given Buhari's previous term as head of state during Nigeria's military dictatorship of 1983-1993. 13 Other network modeling approaches that have been applied in political science include latent space modeling (Cao et al., 2007) and spatial models with endogenous network interdependence (Hays et al., 2010). a somewhat "roundabout" way of testing the determinants of board appointments -since appointments here are an independent variable -the approach can estimate a correlation between connectivity and appointments, while importantly still accounting for the relational nature of the data. ...
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Social processes such as partisan alliances, clientelism, and elite dynamics could be fruitfully studied using recent advances in the analysis of network data. Yet collecting network information on political elites using conventional methods such as surveys and archival records can be inherently difficult in authoritarian and/or conflict-ridden states. This paper introduces a new method for data collection on political elite networks using non-obtrusive web-based techniques. One possible indicator of elite connectivity is co-occurrence at the same political and social events, which I collect using a Google search scraping algorithm to capture how often pairs of individuals appear in the same news articles reporting on these events. I compare data generated from this method to data on network connectedness of elites collected by previous scholars. I then supply an application by collecting network data on the Nigerian oil elite in 2012 and 2015 to test whether lucrative state positions are populated via patronage networks. Given that many political theories on elite behavior aim to understand individual-and group-level interactions, the potential applicability of network data using the proposed technique is very large, especially in situations where collecting network data intrusively is costly or prohibitive.
... In line with recent analyses of the adaptation of globalization in developed countries (Farrell and Newman, 2015), our evidence indicates that regulatory disagreements may cause nuanced layering of regulatory instruments. Furthermore, our argument provides support to the claim that governments can maintain domestic policy control under conditions of international interdependence (Cao et al., 2007;Rickard, 2012;Shipan and Volden, 2006). ...
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... For this variable, I use a ratio of the government spending on protective to the spending on productive policies. A ratio of different public expenditures has been used in many studies in examining policy priorities (Beramendi et al. 2015;Cao, Prakash and Ward 2007;Lynch 2006). This measures allows researchers to directly compare the degree to which government resources are devoted to one type of expenditures over the other. ...
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While many studies have shown that greater trade openness affects the overall size of social spending, this study emphasizes that it also affects types of social policies that a government prioritizes. When faced with deepening trade competition, governments tend to use different policy measures to address the opportunities and challenges stemming from their economic competitiveness in the international market. Policy makers in countries with high relative labor costs are likely to privilege social insurances and income transfer. This is because as high labor costs make their workers more vulnerable in the trade competition, governments seek to protect skilled labor in order to maintain their economic advantage in advanced industries. In contrast, when relative labor costs are low, human capital investment programs are likely to be emphasized to enhance productivity and the quality of labor to capitalize the cost competitiveness of a country’s workers. The findings from empirical analyses of 26 OECD economies from 1991 to 2012 support these arguments.
... DKSEs also control for spatial dependence 58 and are better than an OLS regression with panel-corrected standard errors (PCSEs) when N is larger than T, as is true of the data in this study. This study conducts a robust check and finds that DKSEs detect the serial correlation problems in all five models. ...
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... Controlling for confounders blocks non-causal paths, thus removing confounding bias and we can correctly estimate the effect of Policy Preferences on aid allocations. However, if we assume that the debt-GDP ratio of a country is caused by different unobserved factors (e.g. rise in social expenditure or loss of productivity, both of which may affect aid allocations see (Cao et al. 2007, Rickard 2012b, and Zahariadis 2010 then it also becomes a collider. In this case, we cannot properly identify and interpret the causal effect of the estimated parameters. ...
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List of tables and figures Preface 1. Introduction 2. Politics, policy and performance 3. Market integration and domestic politics 4. Economic policy 5. Economic performance 6. The 1990s and beyond Notes References Index.
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Many sources of economic data cover only a limited set of states at any given point in time. Data are often systematically missing for some states over certain time periods. In the context of conflict studies, economic data are frequently unavailable for states involved in conflicts, undermining the ability to draw inferences of linkages between economic and political interactions. For example, simply using available data in a study of trade and conflict and disregarding observations with missing data on economic variables excludes key conflicts such as the Berlin crisis, the Korean War, the Cuban Missile Crisis, and the Gulf War from the sample. A set of procedures are presented to create additional estimates to remedy some of the coverage problems for data on gross domestic product, population, and bilateral trade flows.
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Theory: We assess the determinants of the national regulation of international finance, or the comparative degree of national financial openness or closure. Hypotheses: Partisanship interacts with a nation's factor endowments to account in part for different international financial policies by governments of the same partisan hue. Methods: We offer a quantitative measure of international financial openness, or current and capital account regulation, for 21 member countries of the Organization for Economic Cooperation and Development for 1950-88. We use regression analysis employing Panel Corrected Standard Errors to discover the determinants of financial openness. Results: Our main finding is that political partisanship substantially explains openness, but does so in complex ways. Differences in both political institutional arrangements and types of political economy also account for part of the differences in international financial regulation.
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Small States in World Markets: Industrial Policy in EuropeKatzensteinPeter J.Ithaca: Cornell University Press, 1985, pp. 268 - Volume 19 Issue 2 - Michael M. Atkinson
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This article demonstrates how spatially dependent data with a categorical response variable can be addressed in a statistical model. We introduce the idea of an autologistic model where the response for one observation is dependent on the value of the response among adjacent observations. The autologistic model has likelihood function that is mathematically intractable, since the observations are conditionally dependent upon one another. We review alternative techniques for estimating this model, with special emphasis on recent advances using Markov chain Monte Carlo (MCMC) techniques. We evaluate a highly simplified autologistic model of conflict where the likelihood of war involvement for each nation is conditional on the war involvement of proximate states. We estimate this autologistic model for a single year (1988) via maximum pseudolikelihood and MCMC maximum likelihood methods. Our results indicate that the autologistic model fits the data much better than an unconditional model and that the MCMC estimates generally dominate the pseudolikelihood estimates. The autologistic model generates predicted probabilities greater than 0.5 and has relatively good predictive abilities in an out-of-sample forecast for the subsequent decade (1989 to 1998), correctly identifying not only ongoing conflicts, but also new ones.
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Privileging Industry: The Comparative Politics of Trade and Industrial Policy. By Fiona McGillivray. Princeton: Princeton University Press, 2004. 224p. $55.00 cloth, $19.95 paper. Of the various transnational economic linkages, international trade is the most explicitly and persistently political. It is also very closely tied to industrial and investment policies in domestic political economies. In this tightly and clearly argued book, Fiona McGillivray comes to terms with the political dimensions of trade and industrial policy by focusing on how electoral rules, strength of political parties, and industrial geography affect trade policy, and she provides a persuasive argument about the conditions under which politicians act to redistribute income toward particular industrial sectors.
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We examine some issues in the estimation of time-series cross-section models, calling into question the conclusions of many published studies, particularly in the field of comparative political economy. We show that the generalized least squares approach of Parks produces standard errors that lead to extreme overconfidence, often underestimating variability by 50% or more. We also provide an alternative estimator of the standard errors that is correct when the error structures show complications found in this type of model. Monte Carlo analysis shows that these "panel-corrected standard errors" perform well. The utility of our approach is demonstrated via a reanalysis of one "social democratic corporatist" model.
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This article responds to Jackman's central theoretical and empirical criticisms of our research. First, the policy convergence thesis is far less persuasive than Jackman asserts and there is strong theoretical support for our original argument. Second, the empirical tests presented by Jackman are not as conclusive as he suggests. The Norwegian outlier is better remedied on Jackman's own terms by controlling for oil dependence than by exclusion from the analysis. Once this is done the data are more supportive of our thesis. Finally, we suggest that a pooled time series, cross-section design may provide better tests for our argument than those presently in debate.
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Electricity supply in the European member states has been a closed national public sector service without competition for a long time. Currently, the European electricity industry is subject to radical change resulting from the European directive establishing common rules for the internal market in electricity, which came into force in 1997. This paper attempts to explain the varying forms of implementation of the internal electricity market in France and Germany. First, it clarifies the special characteristics of electricity supply and European electricity policy. Secondly, the paper shows the divergent sectoral arrangements of the French and German electricity industries. Thirdly, it points out that the different degrees of linkage between the public players and the electricity companies in France and Germany produce different political strategies which are followed by the companies at the European level, especially those strategies which seek direct influence on the European Commission. Finally, the paper reveals the significance of these strategies in Brussels in terms of the implementation of the single electricity market in both member states. Copyright © 2003 Henry Stewart Publications
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In this article I seek to explain why European Community members subsidized a substantial portion of their economies in the period 1981–1986. I test three competing explanations: socioeconomic, party control, and world markets. Parties have an impact on overall state subsidies and loans, but trade deficits are most influential in the disbursement of direct budget outlays and tax incentives. Unemployment has no effect on subsidies. The differential responsiveness to trade and parties is likely to frustrate efforts toward greater European integration.
Chapter
Evolution of the Market PatternThe Self-Regulating Market and the Fictitious Commodities: Labor, Land, and Money
Article
Why do national governments in industrialized countries subsidize many of their industries? Borrowing insights from literature on transaction cost economics and international trade, I build a model which tests the hypothesis that under threat of international competition disbursement of state subsidies varies systematically with the degree of asset (factor) specificity employed in a national economy. Asset specificity refers to the cost of moving factors (assets) from one activity to the next. I pool annual data on state subsidies in thirteen OECD countries during the period 1990–93 and regress them on two measures of asset specificity (physical and human capital) in the face of competition from abroad. Physical capital exercises a significant u-shaped effect on total and sectoral subsidies. Human capital has a weak negative effect on horizontal subsidies. The results extend the literature on asset specificity and trade in two ways. First, they provide empirical support in favor of the argument that asset specificity and subsidy protection are related. While theoretical claims concerning asset specificity abound, the literature is generally short of empirical studies. Second, asset specificity helps determine the scope of subsidies.
Article
Are there noticeable differences among political parties in a country over their trade policy positions? Do left parties advocate different trade policies than right parties? In the advanced industrial countries where labor tends to be scarce, are left parties more protectionist than right ones, which represent capital owners? Political institutions within these democratic countries may affect the role of partisanship. We also investigate whether increasing globalization has led to more or less partisan polarization over trade policy. We examine 25 developed countries from 1945 to 1998 to see how their parties have competed over trade policy. Controlling for various factors, partisanship matters. Right parties consistently take more free trade stances than do left ones. Globalization and other international forces have also shaped both the nature and the extent of the domestic debate over exposure to international trade.
Book
Globalization is exposing social fissures between those with the education, skills, and mobility to flourish in an unfettered world market--the apparent "winners"--and those without. These apparent "losers" are increasingly anxious about their standards of living and their precarious place in an integrated world economy. The result is severe tension between the market and broad sectors of society, with governments caught in the middle. Compounding the very real problems that need to be addressed by all involved, the kneejerk rhetoric of both sides threatens to crowd out rational debate. From the United States to Europe to Asia, positions are hardening. Author Dani Rodrik brings a clear and reasoned voice to these questions.Has Globalization Gone Too Far? takes an unblinking and objective look at the benefits--and risks--of international economic integration, and criticizes mainstream economists for downplaying its dangers. It also makes a unique and persuasive case that the "winners" have as much at stake from the possible consequences of social instability as the "losers." As Rodrik points out, ". . . social disintegration is not a spectator sport--those on the sidelines also get splashed with mud from the field. Ultimately, the deepening of social fissures can harm all." President Clinton read the book and it provided the conceptual basis for the trade/IMF portions of his State of the Union message in January 1998. * Globalization is "the next great foreign policy debate," Thomas Friedman of the New York Times wrote, and he found Has Globalization Gone Too Far? "provocative" on the subject. This book provides a critical definition--and welcome clarity--to that debate.
Book
This book synthesizes and extends modern political-economic theory to explain the postwar evolution of macroeconomic policy in developed democracies. Chapters II-IV study transfers, debt, and monetary/wage policy-making and outcomes, stressing that participation enhances transfer-policy responsiveness to inequality and vice versa, that policy-making veto actors retard fiscal-policy adjustments, inducing greater long-run debt-responses to all other political-economic stimuli, and that monetary policy’s nominal and real effects depend, respectively, on the broader political-economic interest-structure and on wage-price bargainers’ sectorial composition and coordination. Broadly, the book argues that these developments have exacerbated the distributional conflicts inherent in the policies to which postwar governments had committed while undermining their more-universally desired efficiency-fostering roles. Battles that once raged primarily over policies conducted within postwar-commitment frameworks now rage over the putative ‘reforms’ of the frameworks that will set the institutional rules within which democratic struggle over macroeconomic policy and free-market competition will continue.
Book
The division of the world into rich and poor nations, and the division within poor nations between a minority of rich people and a majority of poor people living at a minimum subsistence level, has been obvious to careful observers for a long time. This book gives an overview of the problems of underdevelopment confronting third-world countries, making use of both Marxist and neo-Keynesian methods of analysis. It makes clear the historical origins of these contemporary problems, particularly with reference to the major countries of Asia and Latin America, and discusses the ways in which inequalities, both within and between countries, are propaged and perpetuated. Other problems analysed are the typical patterns of fluctuating growth faced by third-world countries; the social structures in both rural and urban areas and their influence on the behaviour of governments and private investors in these countries; and environmental control and population planning issues faced by these countries. Finally, an introduction is provided to the planning methods adopted by most third-world countries and the hurdles such planning has encountered. The illustrations are drawn widely from among third-world countries.