Globalization and the productive welfare state: case study of South Korea

Abstract

What are the effects of globalization on productive welfare states? In contrast to protective welfare states, such as India's, are they advancing towards the neoliberal bottom? Who gets hurt from changes in welfare policies as markets expand in productive welfare states? Using details from the case of South Korea, this chapter seeks to answer these questions by illustrating how the interplay of international markets and domestic institutions shapes social policies in a productive welfare state. Just as in protective welfare states (e.g. India), globalization pressures are real and have prompted cutbacks in several of South Korea's welfare programs. At the same time, the South Korean government has also explored ways to make the productive welfare state more “protective.” The introduction of universal pensions and health insurance constitutes two examples. This is very distinct from India, a protective welfare state, where the (relatively) major path-breaking reforms have been in the “productive” welfare category (e.g. education). Despite succumbing to some race to the bottom pressures, however, the main features of South Korea's productive welfare state remain intact: promoting citizens' market reliance through extensive state intervention and a concentration of public resources on commodification, particularly education. As a result, the situation of better-off groups in society is similar for both regime types: long-standing domestic institutions essentially guarantee that the more privileged sectors will have access to protections from the risks and uncertainties associated with the globalizing environment.