Globalization’s effect on welfare spending is non-linear, not monotonic

Evidence

Hicks (1999) finds that the relationship between globalization and welfare state retrenchment is non-linear in nature: increases in foreign direct investment are associated with an acceleration of welfare-state spending up to a certain threshold, and beyond that threshold a deceleration. Hicks (1999, p. 212) explains this result by suggesting that increased openness generates demands from citizens for ‘protection’ from the viscitudes of international markets (cf., Garrett, 1998), but too much openness may embolden business interests,constraining the ability of the state to respond to such demands. — Greta R. Krippner, The Financialization of the American…, 141

Categorization

• SHARE: A nice nuance for anyone working on globalization’s effects: the non-linear threshold finding in Hicks (1999).