Development, Democracy, and Welfare States: Latin America, East Asia, and Eastern Europe
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Development, Democracy, and Welfare States: Latin America, East Asia, and Eastern Europe
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Overview
This is the first book to compare the distinctive welfare states of Latin America, East Asia, and Eastern Europe. Stephan Haggard and Robert Kaufman trace the historical origins of social policy in these regions to crucial political changes in the mid-twentieth century, and show how the legacies of these early choices are influencing welfare reform following democratization and globalization.
After World War II, communist regimes in Eastern Europe adopted wide-ranging socialist entitlements while conservative dictatorships in East Asia sharply limited social security but invested in education. In Latin America, where welfare systems were instituted earlier, unequal social-security systems favored formal sector workers and the middle class.
Haggard and Kaufman compare the different welfare paths of the countries in these regions following democratization and the move toward more open economies. Although these transformations generated pressure to reform existing welfare systems, economic performance and welfare legacies exerted a more profound influence. The authors show how exclusionary welfare systems and economic crisis in Latin America created incentives to adopt liberal social-policy reforms, while social entitlements from the communist era limited the scope of liberal reforms in the new democracies of Eastern Europe. In East Asia, high growth and permissive fiscal conditions provided opportunities to broaden social entitlements in the new democracies.
This book highlights the importance of placing the contemporary effects of democratization and globalization into a broader historical context.
Product Details
| ISBN-13: | 9780691214153 |
|---|---|
| Publisher: | Princeton University Press |
| Publication date: | 06/16/2020 |
| Sold by: | Barnes & Noble |
| Format: | eBook |
| Pages: | 496 |
| File size: | 7 MB |
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Development, Democracy, and Welfare States Latin America, East Asia, and Eastern Europe
By Stephan Haggard Robert R. Kaufman Princeton University Press
Copyright © 2008 Princeton University Press
All right reserved.
ISBN: 978-0-691-13595-3
Introduction Toward a Political Economy of Social Policy
The comparative study of social policy in developing countries is of recent vintage. Yet the middle-income countries of Latin America, East Asia, and Eastern Europe have welfare systems that originated in the early postwar period. The questions posed by these systems are the same as those that motivate the literature on the advanced welfare state: Why did governments undertake the provision of social insurance and services? How have welfare systems evolved over time, and how are benefits distributed?
The relevance of these questions has been heightened by epochal political and economic changes that occurred in the developing and formerly socialist world in the 1980s and 1990s. Most countries in the three regions democratized during this period, raising hopes that new governments would be more attentive to social issues. At the same time, most countries also experienced financial crises, recession, and associated fiscal constraints. These problems triggered wide-ranging reforms, including, but by no means limited to, liberalization and increased economic openness.
Economic crisis and market reforms entailed serious social dislocations and raised questions about the viabilityof existing welfare commitments. Could social spending be sustained in the face of severe fiscal constraints? Or would economic crises and reform force new democracies to limit, or retrench, social-policy commitments?
In this book, we analyze the development and reform of social policy among the middle-income countries of Latin America, East Asia, and Eastern Europe. By 1980, at the onset of the major economic and political changes of the late twentieth century, the three regions had developed distinctive social-welfare models. Eastern European welfare systems, though increasingly strained, provided comprehensive protections and services to almost all of their populations. East Asian welfare systems offered minimal social insurance, but a number placed a high priority on investment in education. In Latin America, the urban middle class and some blue-collar workers enjoyed access to relatively generous systems of public protection, but peasants and informal-sector workers were generally excluded or underserved.
These welfare legacies had a strong influence on both the politics and the economics of social policy as the countries of the three regions democratized. Past policies-or the absence of them-created constituencies and generated demands on incoming democratic governments. Prior welfare commitments also had important fiscal implications. In Eastern Europe and Latin America, entitlements placed heavy burdens on governments and generated strong pressures for reform and even retrenchment. In the high-growth Asian countries, by contrast, new democratic governments were relatively unencumbered by prior welfare commitments and had room to expand social insurance and services.
In exploring these distinctive welfare trajectories, we build on three lines of theoretical argument that have motivated the literature on the advanced welfare state. The first, and arguably the most basic, is the significance of distributive coalitions and economic interests. Following the power-resource approach, we consider the extent to which political elites incorporate or exclude organizations and political parties representing urban labor and the rural poor. We focus initially on critical political realignments that resulted in the long-term repression of these groups in some countries and allowed space for them to operate in others. Over time, as Pierson (1994) has argued with respect to advanced welfare states, the commitments established through these initial political choices created stakeholders and constituencies that influenced the subsequent course of social policy.
The second set of factors we consider are economic; this set includes both the performance of the economy and its organization. Economic performance exerts a crucial influence on social policy, particularly through its effect on the fiscal capacity of the state. High growth is at least a permissive condition for an expansion of entitlements and spending, slow growth, crises, and attendant fiscal constraints, by contrast, place political as well as economic limits on the ability to sustain welfare entitlements and services.
Our focus on the "organization" of the economy follows and modifies the varieties of capitalism literature. We show how the development strategies of governments, and the resultant production strategies of firms, are complementary to particular social policies and labor-market institutions. Over time, the sustainability of these different economic models also had a crucial impact on the path of social policy. The crisis and transformation of Latin America's import-substitution model during the 1980s and the rapid implosion of state socialism in the early 1990s undermined import-substituting firms and state-owned enterprises that had been central pillars of social policy in both regions. Privatization, restructuring, and greater exposure to international competition had important implications for the social contract.
Political institutions constitute the third cluster of factors that influence social policy. Given the political heterogeneity of the countries in our sample, and the "third wave" of democratization that began in the 1970s, we are particularly interested in the influence of regime type. To what extent did democracy and democratization affect the responsiveness of governments to the interests of low-income groups?
Regime type is an important component of any explanation of social policy. Dictatorship and democracy determine the extent to which competing parties can enter the electoral arena and the freedom interest groups enjoy in organizing and exercising influence. However, we also emphasize the limitations of a purely institutional approach. Institutional rules of the game-the supply side of the political market-are not sufficient to account for the character of social policy without consideration of underlying interests and their organization-the demand side of the political market-and the economic context in which governments operate.
THE SCOPE OF SOCIAL POLICIES AND VARIATIONS IN WELFARE SYSTEMS
What do we mean by social or welfare policy? An expansive view of the social contract between states and citizens would arguably begin with the capacity of governments to deliver economic growth. However, the question of growth is analytically distinct from the question of how governments choose to redistribute income, either through insurance schemes that mitigate risk or through spending on basic social services that are of particular significance to the poor. We focus on these two broad areas of social policy and on the particular way they are combined in broader policy complexes.
In principle, social insurance can offer protection against the full range of life-cycle and market risks, including sickness, work-related injury and disability, maternity and childbearing, unemployment, retirement, and death (through survivors' benefits). However, pensions and health insurance are the most significant forms of social insurance in the countries in our sample, and we pay particular attention to them. In our consideration of more recent reforms in part 2, we also examine antipoverty and labor market policies, which are relative latecomers to the social-policy mix.
The second area of social policy is the provision of basic social services. Access to high-quality education and primary health services is widely viewed as critical for expanding human freedom and capabilities (Nussbaum and Sen 1993; Sen 1999) and is an underlying determinant of life chances and arguably of growth itself. Access to primary education and basic health care is especially important in labor-abundant economies, since it augments the human capital of the poor, their most basic resource (Lindert 2004).
Following Esping-Andersen (1990), we argue that specific social policies do not evolve in isolation but cluster together into identifiable complexes. Table I.1 provides a stylized summary of these models across the three regions during the early post-World War II decades. In Eastern Europe, social policy was anchored by an overarching employment guarantee, but also by a strong commitment to education and training, universal health care and pensions, and family allowances. These commitments began as occupational ones but were transformed over the postwar period into universal citizenship rights. In Latin America, most states established occupationally based social insurance and health systems that favored formal-sector workers but typically excluded informal urban workers and the rural sector. The provision of basic social services also showed a marked inequity in distribution, reenforcing rather than mitigating long-standing patterns of inequality in the region. In Asia, social insurance was limited and, where it did exist, was provided through mandated individual savings programs that had little or no redistributive component. Nonetheless, governments attached a high priority to the provision of primary and secondary education and, somewhat more unevenly, to public health and basic health services.
Contrasts between these systems constitute the pivot around which we organize the core arguments of this book. In part 1 (chapters 1 through 4) we examine the initiation and expansion of welfare commitments in the three regions from the early postwar period through the late 1970s, and, in the socialist cases, through the 1980s. We trace the origins and evolution of these systems to political realignments that occurred during the early and mid-twentieth century and the subsequent adoption of distinctive development models. Part 2 focuses on the political conflicts over social policy during and after the "third wave" of democratization (c. 1980-2005). We show that economic conditions and welfare legacies strongly influenced how new democracies dealt with these conflicts.
These arguments are outlined briefly in the first two sections of this introduction. In the third section, we take up the issue of institutions and regime type in more detail. Section four considers some methodological issues that arise in the comparative historical analysis that forms the empirical core of the book. We close this introduction by locating our work in the broader literature on the welfare state, a task we revisit in the conclusion to the volume.
CRITICAL REALIGNMENTS, DEVELOPMENT STRATEGIES, AND THE ORIGIN AND EVOLUTION OF WELFARE SYSTEMS
In seeking to explain the origins and early development of welfare commitments, we must analyze why political elites have incentives to distribute and redistribute income in a particular way. But we must first make choices about the appropriate time frame for thinking about these issues. A number of recent studies of long-run growth have located the ultimate origins of key political and economic institutions in the colonial period (Kohli 2004; Acemoglu, Johnson, and Robinson 2001, 2005) or in wholly exogenous factors, such as resource endowments and geography (Engerman and Sokoloff 2000, 2002). These long-run constraints no doubt operate on social policy, and we consider the significance of colonial inheritance in particular. But this focus on very long-run forces seems misplaced for our purposes, given quite fundamental political discontinuities that occurred in the mid-twentieth century in the three regions, as well as important changes in the welfare policies we seek to explain.
A more plausible alternative is that the politics of social policy is determined by the more proximate processes of growth and structural economic change. The modernization approach to the welfare state traces the early origins of welfare commitments to the functional requirements of industrialization and the political demands unleashed by it. The differences in welfare models that we have highlighted in table I.1 might result, not from distinctive political factors, but from variation in the level of development and the extent of structural change across countries.
Again, we are skeptical. Industrial growth and social modernization certainly contributed to the emergence of the modern welfare state. But these are highly general processes, and if we have learned one thing about modern capitalism it is the absence of a single model. Countries experiencing "modernization" end up with very different market institutions and social-policy complexes. In chapter 1, we provide some simple, cross-national regressions to justify our skepticism. These models suggest that the relationship between level of development and social policy is by no means as robust as one might expect; even controlling for "modernization," important cross-regional differences persist. These results are consistent with our claim that the course of social policy depends on political and economic factors that cannot be reduced to the modernization process alone.
Critical Realignments and the International Setting
In contrast to these "deep" historical and modernization arguments, we focus on discontinuities in patterns of political domination that occurred in each of the three regions during the first half of the twentieth century. We identify these discontinuities by the emergence of new ruling coalitions and political incorporation or exclusion of working-class and peasant organizations. The incorporation of urban working-class and rural-sector organizations influenced social policy through the basic mechanisms identified by the power-resource approach: by determining the constituencies to which politicians-whether democratic or authoritarian-responded. Exclusion of these groups gave elites greater leeway in pursuing their political and economic objectives.
In East Asia and Eastern Europe, critical realignments occurred in the aftermath of World War II and were strongly influenced by international political developments. In both regions, great powers provided crucial support for new political elites who brought with them novel political and economic projects. In both regions, these projects dramatically weakened organized labor, the left, and rural political movements.
However, they did so with fundamentally different aims. In Asia, the turbulent wave of decolonization set in train by the end of the Pacific War was followed quickly by the onset of the Cold War and the triumph of conservative, anti-Communist political leaderships. With external support, new governments beat back the challenge from the left in the cities and forestalled or defeated armed insurgencies in the countryside. But in varying degrees, and in contrast to Latin America, these new political elites also reached into the rural areas for political support.
In Eastern Europe, Soviet influence prevailed. As in East Asia, the postwar liberation initially unleashed a wide spectrum of new social forces. With the consolidation of power by Communist parties, however, came the destruction of independent social-democratic and peasant parties and the transformation of unions into arms of the party-state. The distinctive features of socialist social policy were not based on accommodation of labor and the left, as was the case in the European social democracies. Rather, labor and the peasantry were subordinated to the political, economic and organizational logic of the command economy.
In Latin America, we identify the critical realignments with reformist challenges to the oligarchic states of the nineteenth century. In contrast to Asia and Eastern Europe, these political changes predated the great-power rivalry of the Cold War era. New contenders for political power could not count on sustained support from powerful external patrons. Rather, they relied on the support of cross-class coalitions that offered legal status and influence to segments of organized labor and, in some instances, to popularly based parties. But antioligarchic coalitions also typically included some segments of the dominant landowning class itself, and urban-based political challengers found it difficult to penetrate the countryside to the same extent as in Eastern Europe and East Asia. Peasants and agricultural workers remained politically marginalized and the countryside relatively disadvantaged in the provision of social insurance and services.
(Continues...)
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Table of Contents
List of Figures xi
List of Tables xiii
Preface and Acknowledgments xvii
Abbreviations xxiii
INTRODUCTION: Toward a Political Economy of Social Policy 1
PART ONE: The Historical Origins of Welfare Systems, 1945-80 25
CHAPTER ONE: Social Policy in Latin America, East Asia, and Eastern Europe, 1945-80: An Overview 27
CHAPTER TWO: The Expansion of Welfare Commitments in Latin America, 1945-80 79
CHAPTER THREE: The Evolution of Social Contracts in East Asia, 1950-80 114
CHAPTER FOUR: Building the Socialist Welfare State: The Expansion of Welfare Commitments in Eastern Europe 143
PART TWO: Democratization, Economic Crisis, and Welfare Reform, 1980-2005 179
CHAPTER FIVE: The Political Economy of Welfare Reform 181
CHAPTER SIX: Democracy, Growth, and the Evolution of Social Contracts in East Asia, 1980-2005 221
CHAPTER SEVEN: Democracy, Economic Crisis, and Social Policy in Latin America, 1980-2005 262
CHAPTER EIGHT: The Legacy of the Socialist Welfare State, 1990-2005 305
CONCLUSION: Latin America, East Asia, Eastern Europe, and the Theory of the Welfare State 346
APPENDIX ONE: Cross-National Empirical Studies of the Effects of Democracy on Social Policy and Social Outcomes 365
APPENDIX TWO: Fiscal Federalism and Social Spending in Latin America, East Asia, and Eastern Europe 370
APPENDIX THREE: A Cross-Section Model of Social Policy and Outcomes in Middle-Income Countries, 1973-80 372
APPENDIX FOUR: Regime-Coding Rules 379
APPENDIX FIVE: A Cross-Section, Time-Series Model of Social Spending in Latin America, East Asia, and Eastern Europe, 1980-2000 382
APPENDIX SIX: Social Security, Health, and Education Expenditure in East Asia, Latin America, and Eastern Europe, 1980-2005 387
References 399
Index 449
What People are Saying About This
While many authors cannot see beyond the borders of their own country, Haggard and Kaufman masterfully compare Latin America, East Asia, and East Europe from a global perspective. These two great scholars analyze urgent contemporary problems, the status and future fate of the welfare state, and the relationship of changes with the creation and development of democracy with remarkable expertise, precision, and human empathy.
— Janos Kornai, professor emeritus, Harvard University and Collegium Budapest
This book has no equal in the welfare-state literature, a truly impressive achievement. Haggard and Kaufman combine meticulous scholarship with sophisticated theoretical guidance in this study of welfare state evolution in Latin America, Asia, and East Europe. The book not only fills a huge void in our knowledge, it also compels us to seriously rethink prevailing theory.
— Gosta Esping-Andersen, Universitat Pompeu Fabra, Barcelona
This ambitious book extends the theoretical framework of the literature on welfare states in the advanced capitalist countries, and situates the experience of these countries in a broader comparative context. Haggard and Kaufman bring out the multifaceted implications of development models and regime types for social policy. Their synthetic account is truly a tour de force and a testimony to the fruitfulness of cross-regional comparison.
— Jonas Pontusson, Princeton University
"While many authors cannot see beyond the borders of their own country, Haggard and Kaufman masterfully compare Latin America, East Asia, and East Europe from a global perspective. These two great scholars analyze urgent contemporary problems, the status and future fate of the welfare state, and the relationship of changes with the creation and development of democracy with remarkable expertise, precision, and human empathy."—János Kornai, professor emeritus, Harvard University and Collegium Budapest"This ambitious book extends the theoretical framework of the literature on welfare states in the advanced capitalist countries, and situates the experience of these countries in a broader comparative context. Haggard and Kaufman bring out the multifaceted implications of development models and regime types for social policy. Their synthetic account is truly a tour de force and a testimony to the fruitfulness of cross-regional comparison."—Jonas Pontusson, Princeton University"A masterly analysis of how political interests, economic circumstances, development strategies, and local history have shaped what are surprisingly different versions of the welfare state across the developing world. The authors combine fine-grained country analyses with intelligent use of data, and explain and extend the theory and literature on the modern welfare state. The book is both scholarly and readable."—Nancy Birdsall, president of the Center for Global Development"This book has no equal in the welfare-state literature, a truly impressive achievement. Haggard and Kaufman combine meticulous scholarship with sophisticated theoretical guidance in this study of welfare state evolution in Latin America, Asia, and East Europe. The book not only fills a huge void in our knowledge, it also compels us to seriously rethink prevailing theory."—Gøsta Esping-Andersen, Universitat Pompeu Fabra, Barcelona"A very, very valuable book. Haggard and Kaufman are up to their old tricks—helping establish a new line of investigation in a desperately understudied field. This book will be widely read, heavily cited, and will inspire a generation of research. It is going to have an important impact in comparative politics and beyond."—Erik Wibbels, Duke University"A major undertaking that will make a significant contribution to the scholarship on welfare states in political science and sociology. This ambitious book provides a wealth of information on twenty-one countries' social welfare trajectories from the end of World War II to the present. Haggard and Kaufman provide quantitative analysis of trends with detailed country histories, which makes for an empirically rich account."—Nina Bandelj, University of California, Irvine
A masterly analysis of how political interests, economic circumstances, development strategies, and local history have shaped what are surprisingly different versions of the welfare state across the developing world. The authors combine fine-grained country analyses with intelligent use of data, and explain and extend the theory and literature on the modern welfare state. The book is both scholarly and readable.
— Nancy Birdsall, president of the Center for Global Development
A major undertaking that will make a significant contribution to the scholarship on welfare states in political science and sociology. This ambitious book provides a wealth of information on twenty-one countries' social welfare trajectories from the end of World War II to the present. Haggard and Kaufman provide quantitative analysis of trends with detailed country histories, which makes for an empirically rich account.
— Nina Bandelj, University of California, Irvine
A very, very valuable book. Haggard and Kaufman are up to their old tricks—helping establish a new line of investigation in a desperately understudied field. This book will be widely read, heavily cited, and will inspire a generation of research. It is going to have an important impact in comparative politics and beyond.
— Erik Wibbels, Duke University