| Popis: |
Openness to trade promotes economic growth and reduces poverty. In terms of its impact on welfare policies it has been said on the hand to reduced social spending, and on the other hand it has been argued that small open economies in Europe have opted for redistributive economic policies. In this paper we aim to test the hypothesis of whether economic openness has actually led to increased social spending. We do this with a sample of 20 countries from Europe, North America, and Oceania between 1920 and 1990. It was during this time when social spending increased dramatically and openness rapidly rose following its collapse during WWII. We divide the countries into small and large economies, in order to test Peter Katzenstein’s hypothesis, but we also suggest that important differences can be found between regions/political economies. We find that countries in Southern Europe were both less open during this period and also had a lower degree of social spending compared to Northern and Western Europe. However, we find little statistically significant evidence that openness had a major positive impact on social spending. Rather, it seems that openness was strongly correlated with economic growth, which itself seems to be a better predictor of social spending. |
