IDEAS home Printed from https://ideas.repec.org/a/spr/soinre/v167y2023i1d10.1007_s11205-023-03095-9.html
   My bibliography  Save this article

Development of Social Welfare Policies in the South Asian Association for Regional Cooperation (SAARC) Countries: Globalization and Democracy

Author

Listed:
  • Sarah Hakeem

    (Jinnah University for Women (JUW))

  • Saghir Pervaiz Ghauri

    (Jinnah University for Women (JUW))

  • Rizwan Raheem Ahmed

    (Indus University)

  • Dalia Streimikiene

    (Lithuanian Energy Institute)

  • Justas Streimikis

    (Institute of Economics and Rural Development
    University of Economics and Human Science in Warsaw)

Abstract

The study extends the debate on social spending in the developing world by taking the South Asian Association for Regional Cooperation (SAARC) countries to examine the social policy reactions of democratic and non-democratic regimes to globalization which is one of the main social challenges of sustainable development. This article investigates the impact of globalization and democracy on the aggregate and disaggregates levels of social spending for the selected SAARC countries from the period 1996–2018. The investigation includes how governments react to the challenges of globalization with the welfare policy decisions that are located more toward reducing cost ("efficiency theory") otherwise ensuring individuals' government assistance ("compensation theory"). The results support both the efficiency and compensation thesis depending on which type of globalization indicator is taken under consideration, however, it would be misleading to assume that the efficiency thesis is valid for all developing countries. By using the TSCS data technique on SAARC countries we discovered the impact of globalization on social spending that was supposed to be conditional on regime type. However, the interactive variables reveal an important finding that trade openness tends to increase social spending (the coefficient indicates little systematic effect), and financial openness tends to cut social spending, while democracy of SAARC countries has no significant role or unrelated in counterbalancing these effects. Hence, social spending cannot automatically develop human capital through democratic regime, further SAARC governments are usually in fiscal insolvency that results in allocating most of the resources from budget on debt repayments, leaving a small portion for social-related expenditures.

Suggested Citation

  • Sarah Hakeem & Saghir Pervaiz Ghauri & Rizwan Raheem Ahmed & Dalia Streimikiene & Justas Streimikis, 2023. "Development of Social Welfare Policies in the South Asian Association for Regional Cooperation (SAARC) Countries: Globalization and Democracy," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 167(1), pages 91-134, June.
    • Handle: RePEc:spr:soinre:v:167:y:2023:i:1:d:10.1007_s11205-023-03095-9
    DOI: 10.1007/s11205-023-03095-9
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11205-023-03095-9
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s11205-023-03095-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Benedetto, Giacomo & Hix, Simon & Mastrorocco, Nicola, 2020. "The Rise and Fall of Social Democracy, 1918–2017," American Political Science Review, Cambridge University Press, vol. 114(3), pages 928-939, August.
    2. Giray Gozgor & Priya Ranjan, 2017. "Globalisation, inequality and redistribution: Theory and evidence," The World Economy, Wiley Blackwell, vol. 40(12), pages 2704-2751, December.
    3. Herwartz, Helmut & Theilen, Bernd, 2014. "Partisan influence on social spending under market integration, fiscal pressure and institutional change," European Journal of Political Economy, Elsevier, vol. 34(C), pages 409-424.
    4. Hicks, Alexander M. & Swank, Duane H., 1992. "Politics, Institutions, and Welfare Spending in Industrialized Democracies, 1960–82," American Political Science Review, Cambridge University Press, vol. 86(3), pages 658-674, September.
    5. Casey B. Mulligan & Ricard Gil & Xavier Sala-i-Martin, 2004. "Do Democracies Have Different Public Policies than Nondemocracies?," Journal of Economic Perspectives, American Economic Association, vol. 18(1), pages 51-74, Winter.
    6. Cameron, David R., 1978. "The Expansion of the Public Economy: A Comparative Analysis," American Political Science Review, Cambridge University Press, vol. 72(4), pages 1243-1261, December.
    7. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
    8. Rudra, Nita, 2002. "Globalization and the Decline of the Welfare State in Less-Developed Countries," International Organization, Cambridge University Press, vol. 56(2), pages 411-445, April.
    9. Grunberg, Isabelle, 1998. "Double jeopardy: Globalization, liberalization and the fiscal squeeze," World Development, Elsevier, vol. 26(4), pages 591-605, April.
    10. Niklas Potrafke, 2019. "The globalisation–welfare state nexus: Evidence from Asia," The World Economy, Wiley Blackwell, vol. 42(3), pages 959-974, March.
    11. R. Douglas Hecock, 2006. "Electoral Competition, Globalization, and Subnational Education Spending in Mexico, 1999–2004," American Journal of Political Science, John Wiley & Sons, vol. 50(4), pages 950-961, October.
    12. Axel Dreher & Jan-Egbert Sturm & Heinrich Ursprung, 2008. "The impact of globalization on the composition of government expenditures: Evidence from panel data," Public Choice, Springer, vol. 134(3), pages 263-292, March.
    13. Günther G. Schulze & Heinrich W. Ursprung, 1999. "Globalisation of the Economy and the Nation State," The World Economy, Wiley Blackwell, vol. 22(3), pages 295-352, May.
    14. Gülsün Gürkan Yay & Tolga Aksoy, 2018. "Globalization and the welfare state," Quality & Quantity: International Journal of Methodology, Springer, vol. 52(3), pages 1015-1040, May.
    15. Dani Rodrik, 1998. "Has Globalization Gone Too Far?," Challenge, Taylor & Francis Journals, vol. 41(2), pages 81-94, March.
    16. Duane Swank, 1998. "Funding the Welfare State: Globalization and the Taxation of Business in Advanced Market Economies," Political Studies, Political Studies Association, vol. 46(4), pages 671-692, September.
    17. Pesaran, M. Hashem & Smith, Ron, 1995. "Estimating long-run relationships from dynamic heterogeneous panels," Journal of Econometrics, Elsevier, vol. 68(1), pages 79-113, July.
    18. Stephanie Meinhard & Niklas Potrafke, 2012. "The Globalization–Welfare State Nexus Reconsidered," Review of International Economics, Wiley Blackwell, vol. 20(2), pages 271-287, May.
    19. repec:bla:pacecr:v:10:y:2005:i:1:p:105-123 is not listed on IDEAS
    20. Dalia STREIMIKIENE & Rizwan Raheem AHMED & Saghir Pervaiz GHAURI & Muhammad AQIL & Justas STREIMIKIS, 2020. "Forecasting and the Causal Relationship of Sectorial Energy Consumptions and GDP of Pakistan by using AR, ARIMA, and Toda-Yamamoto Wald Models," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 131-148, July.
    21. Balcells Ventura, Laia, 2006. "Trade Openness and Preferences for Redistribution: A Cross-National Assessment of the Compensation Hypothesis," Business and Politics, Cambridge University Press, vol. 8(2), pages 1-50, August.
    22. Wibbels, Erik, 2006. "Dependency Revisited: International Markets, Business Cycles, and Social Spending in the Developing World," International Organization, Cambridge University Press, vol. 60(2), pages 433-468, April.
    23. Hays, Jude C. & Ehrlich, Sean D. & Peinhardt, Clint, 2005. "Government Spending and Public Support for Trade in the OECD: An Empirical Test of the Embedded Liberalism Thesis," International Organization, Cambridge University Press, vol. 59(2), pages 473-494, April.
    24. Niklas Potrafke, 2015. "The Evidence on Globalisation," The World Economy, Wiley Blackwell, vol. 38(3), pages 509-552, March.
    25. Yoon Jungkeun, 2009. "Globalization and the Welfare State in Developing Countries," Business and Politics, De Gruyter, vol. 11(2), pages 1-33, August.
    26. Markus Leibrecht & Michael Klien & Oezlem Onaran, 2011. "Globalization, welfare regimes and social protection expenditures in Western and Eastern European countries," Public Choice, Springer, vol. 148(3), pages 569-594, September.
    27. Saul Estrin & Adeline Pelletier, 2018. "Privatization in Developing Countries: What Are the Lessons of Recent Experience?," The World Bank Research Observer, World Bank, vol. 33(1), pages 65-102.
    28. Hicks, Alexander & Zorn, Christopher, 2005. "Economic Globalization, the Macro Economy, and Reversals of Welfare: Expansion in Affluent Democracies, 1978–94," International Organization, Cambridge University Press, vol. 59(3), pages 631-662, July.
    29. Balcells Ventura Laia, 2006. "Trade Openness and Preferences for Redistribution: A Cross-National Assessment of the Compensation Hypothesis," Business and Politics, De Gruyter, vol. 8(2), pages 1-52, August.
    30. Nita Rudra, 2005. "Globalization and the Strengthening of Democracy in the Developing World," American Journal of Political Science, John Wiley & Sons, vol. 49(4), pages 704-730, October.
    31. Adserà, Alícia & Boix, Carles, 2002. "Trade, Democracy, and the Size of the Public Sector: The Political Underpinnings of Openness," International Organization, Cambridge University Press, vol. 56(2), pages 229-262, April.
    32. David Shin, 2020. "The Military in Politics and Democracy: Its Impact on Government Spending for Education and Health," Social Science Quarterly, Southwestern Social Science Association, vol. 101(5), pages 1810-1826, September.
    33. Muhammad Islam, 2004. "The long run relationship between openness and government size: evidence from bounds test," Applied Economics, Taylor & Francis Journals, vol. 36(9), pages 995-1000.
    34. Brown, David S. & Hunter, Wendy, 1999. "Democracy and Social Spending in Latin America, 1980–92," American Political Science Review, Cambridge University Press, vol. 93(4), pages 779-790, December.
    35. Yoon, Jungkeun, 2009. "Globalization and the Welfare State in Developing Countries," Business and Politics, Cambridge University Press, vol. 11(2), pages 1-31, August.
    36. Niklas Potrafke, 2009. "Did globalization restrict partisan politics? An empirical evaluation of social expenditures in a panel of OECD countries," Public Choice, Springer, vol. 140(1), pages 105-124, July.
    37. Quinn, Dennis, 1997. "The Correlates of Change in International Financial Regulation," American Political Science Review, Cambridge University Press, vol. 91(3), pages 531-551, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Niklas Potrafke, 2019. "The globalisation–welfare state nexus: Evidence from Asia," The World Economy, Wiley Blackwell, vol. 42(3), pages 959-974, March.
    2. Florian Haelg & Niklas Potrafke & Jan-Egbert Sturm, 2022. "The determinants of social expenditures in OECD countries," Public Choice, Springer, vol. 193(3), pages 233-261, December.
    3. Francesca Gastaldi & Paolo Liberati, 2011. "Economic integration and government size: a review of the empirical literature," Financial Theory and Practice, Institute of Public Finance, vol. 35(3), pages 327-384.
    4. Björn Kauder & Niklas Potrafke, 2015. "Globalization and social justice in OECD countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(2), pages 353-376, May.
    5. Philipp Heimberger, 2021. "Does economic globalization affect government spending? A meta-analysis," Public Choice, Springer, vol. 187(3), pages 349-374, June.
    6. Florian Dorn & Christoph Schinke, 2018. "Top income shares in OECD countries: The role of government ideology and globalisation," The World Economy, Wiley Blackwell, vol. 41(9), pages 2491-2527, September.
    7. Erkam Sari & Hakan Hotunluoglu, 2021. "Government Size and Openness: Insights Basedon Country Classifications," World Journal of Applied Economics, WERI-World Economic Research Institute, vol. 7(1), pages 1-16, June.
    8. Fernando Martín-Mayoral & Juan Fernández Sastre, 2017. "Determinants of social spending in Latin America during and after the Washington consensus: a dynamic panel error-correction model analysis," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 26(1), pages 1-32, December.
    9. Ftergioti, Stamatia, 2017. "Neighbors and Friends: The Effect of Globalization on Party Positions," MPRA Paper 76662, University Library of Munich, Germany.
    10. Vikas Dixit, 2014. "Relation between Trade Openness, Capital Openness and Government Size in India," Foreign Trade Review, , vol. 49(1), pages 1-29, February.
    11. Andreas Bergh & Irina Mirkina & Therese Nilsson, 2020. "Can social spending cushion the inequality effect of globalization?," Economics and Politics, Wiley Blackwell, vol. 32(1), pages 104-142, March.
    12. Kosack, Stephen & Tobin, Jennifer L., 2015. "Which Countries’ Citizens Are Better Off With Trade?," World Development, Elsevier, vol. 76(C), pages 95-113.
    13. McCloud, Nadine & Delgado, Michael S. & Holmes, Chanit'a, 2018. "Does a stronger system of law and order constrain the effects of foreign direct investment on government size?," European Journal of Political Economy, Elsevier, vol. 55(C), pages 258-283.
    14. Stephanie Meinhard & Niklas Potrafke, 2012. "The Globalization–Welfare State Nexus Reconsidered," Review of International Economics, Wiley Blackwell, vol. 20(2), pages 271-287, May.
    15. Jha, Priyaranjan & Gozgor, Giray, 2019. "Globalization and taxation: Theory and evidence," European Journal of Political Economy, Elsevier, vol. 59(C), pages 296-315.
    16. Tushar Bharati & Mohammad Farhad & Michael Jetter, 2023. "On the relationship between trade openness and government size," The World Economy, Wiley Blackwell, vol. 46(7), pages 2102-2133, July.
    17. Ehrlich Sean D, 2010. "Who Supports Compensation? Individual Preferences for Trade-Related Unemployment Insurance," Business and Politics, De Gruyter, vol. 12(1), pages 1-24, April.
    18. Pedro Antonio Martín Cervantes & Nuria Rueda López & Salvador Cruz Rambaud, 2020. "The Effect of Globalization on Economic Development Indicators: An Inter-Regional Approach," Sustainability, MDPI, vol. 12(5), pages 1-18, March.
    19. Kai Jäger, 2017. "Economic Freedom in the Early 21st Century: Government Ideology Still Matters," Kyklos, Wiley Blackwell, vol. 70(2), pages 256-277, May.
    20. Adam, Antonis & Ftergioti, Stamatia, 2019. "Neighbors and friends: How do European political parties respond to globalization?," European Journal of Political Economy, Elsevier, vol. 59(C), pages 369-384.

    More about this item

    Keywords

    SAARC; Globalization and democracy; Social welfare; Social spending; TSCS techniques; Efficiency theory; Compensation theory;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:soinre:v:167:y:2023:i:1:d:10.1007_s11205-023-03095-9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.