Globalization and the Race to the Bottom in Developing Countries: Who Really Gets Hurt?

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  • Edition: 1st
  • Format: Paperback
  • Copyright: 2008-10-13
  • Publisher: Cambridge University Press
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The advance of economic globalization has led many academics, policy-makers, and activists to warn that it leads to a 'race to the bottom'. In a world increasingly free of restrictions on trade and capital flows, developing nations that cut public services are risking detrimental effects to the populace. Conventional wisdom suggests that it is the poorer members of these societies who stand to lose the most from these pressures on welfare protections, but this new study argues for a more complex conceptualization of the subject. Nita Rudra demonstrates how and why domestic institutions in developing nations have historically ignored the social needs of the poor; globalization neither takes away nor advances what never existed in the first place. It has been the lower- and upper-middle classes who have benefited the most from welfare systems and, consequently, it is they who are most vulnerable to globalization's race to the bottom.

Author Biography

Nita Rudra is an Assistant Professor of International Affairs in the Graduate School of Public and International Affairs at the University of Pittsburgh

Table of Contents

List of figuresp. xi
List of tablesp. xiii
Prefacep. xv
Introductionp. 1
Globalization and the race to the bottom debate: the fundamental concernp. 5
The focus and plan of the bookp. 11
Contributionsp. 17
The race to the bottom in developing countriesp. 19
Existing literature on the globalization-welfare state nexusp. 20
Globalization, labor and the race to the bottom in developing countriesp. 24
The evidencep. 26
Contrasting trends in globalization and welfare: rich versus poor nationsp. 26
LDC labor in a globalizing economyp. 30
Model specificationp. 35
The variablesp. 36
Resultsp. 39
Summaryp. 46
Who really gets hurt?p. 48
Importance of the distributive effects of social spending in developing nationsp. 51
Links between globalization, welfare spending, and inequality in OECD countriesp. 52
The link between globalization, welfare spending, and inequality in LDCsp. 54
The base model: the effects of globalization and social spending on income distributionp. 56
The dependent variable: income distributionp. 57
Independent variablesp. 59
Resultsp. 61
Globalization and prospects for equity-enhancing reformp. 65
Robustness checksp. 67
Interpretation of results: the role of government-labor relations, information, and interestsp. 68
Summaryp. 73
LDC welfare states: convergence? What are the implications?p. 75
Welfare states in developing countries? The existing literaturep. 77
Contemplating systematic divergence in LDCs: patterns of welfare regimesp. 80
Questioning CPE convergence: why LDCs are likely to have welfare statesp. 80
Questioning IPE convergence: twentieth-century globalization and different LDC welfare regimesp. 82
Delineating different welfare regimes in developing countriesp. 84
Cluster analysis: testing contrasting hypothesesp. 89
Analysis resultsp. 95
Robustness checksp. 102
Initial interpretation of the resultsp. 103
Implicationsp. 106
Globalization and the protective welfare state: case study of Indiap. 108
India's protective welfare statep. 111
Race to the bottom?p. 114
Social securityp. 116
Health care and educationp. 118
Summaryp. 119
Institutional changep. 120
Welfare regime change?p. 120
Mediating role of domestic institutionsp. 124
Who really gets hurt?p. 130
Social securityp. 131
Health carep. 133
Educationp. 134
Summaryp. 137
Other factors: democracy, ethnic fragmentation, and culturep. 138
Implicationsp. 140
Globalization and the productive welfare state: case study of South Koreap. 142
South Korea's productive welfare statep. 143
Race to the bottomp. 149
Social securityp. 150
Labor market protectionsp. 153
Summaryp. 155
Institutional changep. 155
Welfare regime change?p. 156
Mediating role of domestic institutionsp. 159
Who really gets hurt?p. 165
Labor market protectionsp. 166
Social security (and social assistance)p. 167
Health carep. 169
Educationp. 170
Summaryp. 174
Other factors: democracy, civil society groups, and Japanese influencesp. 174
Implicationsp. 175
Globalization and the dual welfare state: case study of Brazilp. 177
Brazil's weak dual welfare statep. 178
Decommodification policiesp. 180
Commodification policiesp. 183
Race to the bottomp. 185
Social securityp. 185
Labor market protectionsp. 188
Health carep. 189
Educationp. 190
Summaryp. 191
Institutional changep. 191
Welfare regime change?p. 192
Mediating role of domestic institutionsp. 198
Who really gets hurt?p. 204
Social security and labor market protections (and social assistance)p. 204
Health carep. 206
Educationp. 208
Summaryp. 209
Other factors: democracy and partisanshipp. 209
Implicationsp. 210
Conclusionsp. 212
The case studies in perspective: globalization, domestic institutions, and social policiesp. 213
Questioning prevailing assumptions and future researchp. 218
Rethinking the trade-off between states and markets in developing economiesp. 218
Rethinking the political economies of developing countriesp. 219
Rethinking the capital-labor dichotomyp. 221
Broader questions for future researchp. 222
Prospects for the future?p. 222
LDC social spendingp. 224
Assessing potential labor powerp. 229
Additional tests for the RTB hypothesisp. 234
Variables in the inequality modelp. 238
Technical notes on Gini coefficientsp. 239
LDC Gini coefficient statisticsp. 240
Robustness checkp. 242
Conditional impact of trade on inequalityp. 244
Descriptions and sources of variablesp. 246
Cluster results minus outcome variablesp. 247
Dendrogram for cluster analysisp. 248
Poverty tablesp. 249
Social expenditures on social security, health, and education in India (percent of GDP) based on national datap. 253
Referencesp. 255
Indexp. 286
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