Dependency Revisited: International Markets, Business Cycles, and Social Spending in the Developing World

While increased exposure to the global economy is associated with increased welfare effort in the Organization for Economic Cooperation and Development (OECD), the opposite holds in the developing world. These differences are typically explained with reference to domestic politics. Tradables, unions, and the like in the developing world are assumed to have less power or interests divergent to those in the OECD interests that militate against social spending. I claim that such arguments can be complemented with a recognition that developed and developing nations have distinct patterns of integration into global markets. While income shocks associated with international markets are quite modest in the OECD, they are profound in developing nations. In the OECD, governments can respond to those shocks by borrowing on capital markets and spending countercyclically on social programs. No such opportunity exists for most governments in the developing world, most of which have limited access to capital markets in tough times, more significant incentives to balance budgets, and as a result cut social spending at the times it is most needed. Thus, while internationally inspired volatility and income shocks seem not to threaten the underpinnings of the welfare state in rich nations, it undercuts the capacity of governments in the developing world to smooth consumption (and particularly consumption by the poor) across the business cycle.The author would like to thank Steph Haggard, Kristin Bakke, Wongi Choe, Tim Jones, and seminar participants at Duke University, Penn State University, Washington University, MIT, and the University of New Mexico for their helpful comments. Nancy Brune, Mark Hallerberg and Rolf Strauch, and Nita Rudra were very generous in providing their capital account, OECD fiscal, and potential labor power data, respectively.

Replication data for: Riding the Wave: world trade and factor-based models of democratization

Studies of “waves” of regime change, in which large numbers of countries experience similar political transitions at roughly similar periods of time, though once popular, have fallen from favor. Replacing the “third wave” arguments are several competing models relating domestic social structure—specifically the distribution of income and factor ownership—to regime type. If any of these distributive models of regime type is correct then global trade has an important explanatory role to play. Under factor-based models, changes in the world trading system will have systematic effects on regime dynamics. Trade openness determines labor’s factor income and ultimately its political power. As world trade expands and contracts, countries with similar labor endowments should experience similar regime pressures at the same time. We propose a novel empirical specification that addresses the endogeneity and data quality problems plaguing previous efforts to examine these arguments. We investigate the conditional impact of the global trading system on democratic transitions across 130 years and all of the states in the international system. Our findings cast doubt on the utility of factor-based models of democratization, despite their importance in fueling renewed interest in the topic

Replication data for: "Trade, Development, and Social Insurance" International Studies Quarterly 2011

Provides data and R code for replicating analysis and figures from Wibbels and Ahlquist (2011