Economic Globalization and Welfare Spending in 23 Transitional Economies: A Cross-Sectional Time-Series Analysis, 1990-2005

Ting Jiang, University of California, Irvine

In the past two decades, the impact of economic globalization on welfare states has been heatedly debated. Based on the experiences from advanced Western democracies, middle income countries, and less developed countries, scholarship is sharply divided into two camps: those who believe that economic globalization leads to the retrenchment of the welfare state, and those who believe economic globalization leads to the expansion of the welfare state. This paper situates the same debate in a different socioeconomic context: transitional economies in the post-communist era. Based on a sample of twenty-three transitional economies within a time span of 16 years (1990-2005), this paper explores the general relationship between economic globalization and domestic welfare spending; and to what extent this general pattern is mitigated by other factors. Findings strongly suggest the powerful influence of International Monetary Fund (one of the economic globalization variables) on governments’ commitment to welfare spending in post-communist societies.