Globalisation identified three different models of welfareGlobalisation identified three different models of welfare

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 that welfare
states vary considerably in their political orientations and distributional
outcomes, globalisation also impacts them differently. This essay will discuss
the impacts globalisation has on social welfare spending and education policies
in Western European welfare states.

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As previously mentioned, welfare regimes can differ greatly
in their social policies. Esping?Andersen’s typologies of welfare
state regimes help in their comparison as it does not only focus on their level
of expenditure on policy programmes. According to Esping?Andersen,
the focus when analysing welfare regimes should not only be on how much they
spend but also on what they do and how they do it. He identifies three
different dimensions that can explain what and how of welfare regimes. The
first is the degree of decommodification in that is present in the regime. The
second is the degree or extent of welfare state stratification. This looks at
the degree of socio economic inequalities present within a regime The last dimension
is the different patterns of state, market and household forms of provision.

Using these three axes, Esping Anderson identified three different models of
welfare regimes. The first model is a liberal or Anglo Saxon model. The second
is a conservative model and the last model is a social democratic or
Scandinavian model. A Scandinavian model of welfare regimes are characterised
by high levels of decommodification and low levels of stratification while
liberal regimes are characterised by low levels of decommodification and high
levels of stratification. The conservative model on the other hand is typically
characterised with medium levels of decommodification and high levels of
stratification. Grouping welfare state into different typologies allows for the
comparison of their social policy developments. (Arts and Gelissen 2010)


A number of theories and arguments have been proposed to discuss
the impacts of globalisation on welfare. 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 market.


There are two arguments for the expansion of the welfare
state through an increase of social welfare spending due to economic openness i.e.

the compensation hypothesis. According to the first view, economic openness
causes insecurity. The reason is that economically open countries are more
affected by fluctuations on the world market. The interdependence between countries
leads to a process through which the economic situation in one country more
easily affects the situation in other countries. The fluctuations in the world
market may result in unemployment, and it is therefore expected that the
citizens of the more economically open countries need more protection through
the welfare state According to the second view, economic openness requires
investments in the welfare state to strengthen the competitiveness of a
country. Such investments are enabled by increased prosperity and commitment to
welfare spending Moreover, spending on social arrangements creates social
stability, increases human capital and enables collective agreements between
employers and employees that may counter the negative effects of economic openness
Whether the investments in the welfare state are made to deal with insecurity
or to stay competitive, in both instances economic openness leads to an
expansion of the welfare state; in the first case governments respond to
effects that economic openness may have, and in the latter governments actively
develop policies to remain competitive in the world market.


The efficiency hypothesis on the other hand argues
that globalisation has a detrimental effect of on social welfare spending and
welfare state growth. This is due to the fact that as result of globalisation, countries
are in competition to attract capital. Therefore, taxes are reduced in many
countries which leads to a decrease in social welfare spending (Onaran and Boesch, 2014).  Capital flight may
result from high tax levels and due to the globalisation, instantaneous capital
transfers are available, therefore those with money or capital will end up
moving their money to This threatens the financial base of the welfare state
since those with the strongest incentive to leave the country are individuals
and companies contributing the most to the welfare state due to the levels of
tax . It is argued that governments will respond to problems of competitiveness
and capital flight by lowering taxes, resulting in a race to the bottom amongst