Economic Globalization, Inequality, Social Safety Nets, and the Size and Scope of Government in East and Southeast Asia

Abstract

Economic globalization, or economic integration and the liberalization of capital movements across national boundaries, or openness, has been linked to income inequality between and within nations. Using an empirical study of countries within East and Southeast Asia, I establish a general theory about open economies and their relationship to social safety nets and hence bigger and more powerful governments, contrary to the conventional wisdom. This approach was instrumental in determining why some open economies have larger social safety nets, but not necessarily larger governments than less open economies and, conversely, why other open economies have smaller social safety nets and larger governments than less open economies. The nature of the economic/political system was determinative of the degree, timing, and kind of measures taken by governments to alleviate inequality, as well as the size and scope of government, not the degree of openness.