Globalization

This chapter examines the theory and research on the historical and contemporary impacts of economic globalization on trajectories of national welfare states across the globe. It reviews the central contending theories that globalization’s social policy impacts are negative (the efficiency thesis) or positive (the compensation thesis). It also summarizes various contingency arguments such as the idea that globalization’s impacts are conditioned by national political economic institutions. As to extant research, it surveys comparative, quantitative studies on social impacts of the late nineteenth- and early twentieth-century ‘first wave’ of globalization and of contemporary internationalization of markets in developed and developing political economies. The central findings of work on developed democracies are that during the first wave of globalization, and in the three decades after the Second World War, globalization was associated with increases in social protection against risks and transfers to losers of international competition (the compensation thesis); for recent decades, scholars lean towards the view that globalization is associated with modest retrenchments in social welfare provision. Substantial evidence also exists for the notion that these effects are contingent on domestic institutions. For developing nations, many studies show that international openness has been associated with cuts in core social insurance and welfare programmes and with increases in (or no effect on) education and health programmes. Studies also suggest that globalization’s social impacts are contingent on temporal context and domestic institutions. The chapter concludes with a discussion of promising new areas of inquiry on globalization and national welfare states in the twenty-first century.