Globalisation And Welfare Essay

Globalisation has a had great impact in shaping the world as is today. It is defined as the international flow of knowledge and information and global civil societies. Globalisation concerns cross-border interactions between individuals, companies and governments and it entails economic, social and political dimensions. Economic globalisation which is the extent to which countries are integrated into the world market as reflected in their level of economic openness is the focus of this essay. It is conceptualised as the amplification of international economic exchange between different global market economies (Brady et al 2005). Welfare states have a great impact in the level of a country’s participation in the global market. Due to the fact

The first is globalisation has had an expanding effect on welfare states and has allowed them to grow. This is due to the fact that as economic openness increases with the rise in the number of multilateral trade agreements countries are now vulnerable more than ever due to their exposure to the interconnected world market and the increasing competition. According to (Brady et al 2005) this has a positive effect on the welfare spending as countries attempt to appease their population as a response to increased external risks. The second argument is that globalisation causes there to be a retrenchment in the welfare state. This is due to the welfare state losing full control over their policies as the global interconnectedness of global markets increase. Using the two different hypotheses of compensation and effectiveness, this essay will attempt to fully explain both arguments in terms of social welfare spending. The compensation hypothesis claims that the increasing interconnectedness of economies leads to an increase in social welfare spending, which in turn enables an upward shift of taxation. Therefore, there is a positive correlation between economic openness and public spending. The countries and the countries with the largest welfare states are also tend to be the most economically open ones. Economically open countries are countries that are active on the global market whether it be through involvement with supranational organisations such as The World Trade Organisation and The World Bank or through trade agreements. A major aspect of this view is the instability of the labour