Hostname: page-component-586b7cd67f-rdxmf Total loading time: 0 Render date: 2024-11-26T03:25:53.894Z Has data issue: false hasContentIssue false
  • English
  • Français

The Retreat of the Interventionist State in Advanced Democracies

Published online by Cambridge University Press:  20 March 2017

Reimut Zohlnhöfer ,
Fabian Engler  and
Kathrin Dümig
Get access Rights & Permissions [Opens in a new window]

Abstract

Why have advanced democracies experienced a retreat of the interventionist state since 1980? This article provides evidence that in all relevant policy indicators (spending, subsidies, state-owned enterprises, regulation, capital taxation) government intervention has been scaled back across the OECD. An overview of the results of 130 quantitative studies analysing at least one of these indicators is provided. Focusing on five main explanatory variables – globalization, Europeanization, learning and emulation, socio-economic problems, and political parties – only limited agreement in the literature is found. The reasons for this disagreement are discussed. Ways forward are suggested for the theoretical models on which studies are based, how the dependent variable is chosen, the empirical approaches that may be applied, and how quantitative research and comparative case studies may be combined.

Keywords

government spendingprivatizationtaxationliberalizationsubsidiesglobalizationpolicy diffusionpartisan theory
Type
Review Articles
Information
British Journal of Political Science , Volume 48 , Issue 2 , April 2018 , pp. 535 - 562
Copyright
© Cambridge University Press 2017 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

*

Institute of Political Science, Heidelberg University, Germany (email: [email protected]); Institute of Political Science, Heidelberg University, Germany (email: [email protected]); Ministry of Economic Affairs, Lower Saxony, Germany (email: [email protected]). Online appendices are available at http://dx.doi.org/doi: 10.1017/S0007123416000454.

References

List of References

Adam, Antonis, and Kammas, Pantelis. 2007. Tax Policies in a Globalized World: Is It Politics after All? Public Choice 133:321–341.Google Scholar
Adam, Antonis, Kammas, Pantelis, and Lagou, Athina. 2013. The Effect of Globalization on Capital Taxation: What Have We Learned after 20 Years of Empirical Studies. Journal of Macroeconomics 35:199–209.Google Scholar
Adams, James, Haupt, Andrea B., and Stoll, Heather. 2009. What Moves Parties? The Role of Public Opinion and Global Economic Conditions in Western Europe. Comparative Political Studies 42:611–639.Google Scholar
Allan, James, and Scruggs, Lyle. 2004. Political Partisanship and Welfare State Reform in Advanced Industrial Societies. American Journal of Political Science 48:496–512.Google Scholar
Alvarez, Michael R., Garrett, Geoffrey, and Lange, Peter. 1991. Government Partisanship, Labor Organization, and Macroeconomic Performance. American Political Science Review 98:261–276.Google Scholar
Basinger, Scott, and Hallerberg, Mark. 2004. Remodeling the Competition for Capital: How Domestic Politics Erases the Race-to-the-Bottom. American Political Science Review 98:539–556.Google Scholar
Belloc, Filippo, Nicita, Antonio, and Sepe, Simone M.. 2014. Disentangling Liberalization and Privatization Policies: Is There a Political Trade-Off? Journal of Comparative Economics 42:1033–1051.Google Scholar
Bennett, Andrew, and Checkel, Jeffrey T.. 2015. Process Tracing: From Philosophical Roots to Best Practice. Pp. 3–37 in Process Tracing. From Metaphor to Analytic Tool, edited by Andrew Bennett and Jeffrey T. Checkel. Cambridge: Cambridge University Press.Google Scholar
Bortolotti, Bernardo, Fantini, Marcella, and Siniscalco, Domenico. 2003. Privatisation around the World: Evidence from Panel Data. Journal of Public Economics 88:305–332.Google Scholar
Bortolotti, Bernardo, and Pinotti, Paolo. 2008. Delayed Privatization. Public Choice 136:331–351.Google Scholar
Botero, Juan C., Djankov, Simeon, La Porta, Rafael, Lopez-de-Silanes, Florencio, and Shleifer, Andrei. 2004. The Regulation of Labor. Quarterly Journal of Economics 119:1339–1382.Google Scholar
Bradbury, John C., and Crain, W. Mark. 2001. Legislative Organization and Government Spending: Cross-Country Evidence. Journal of Public Economics 82:309–325.Google Scholar
Brady, David, and Lee, Hang Young. 2014. The Rise and Fall of Government Spending in Affluent Democracies, 1971–2008. Journal of European Social Policy 24:56–79.Google Scholar
Brady, David, Seeleib-Kaiser, Martin, and Beckfield, Jason. 2005. Economic Globalization and the Welfare State in Affluent Democracies, 1975–2001. American Sociological Review 70:921–948.Google Scholar
Braun, Dietmar, and Gilardi, Fabrizio. 2006. Taking ‘Galton’s Problem’ Seriously: Towards a Theory of Policy Diffusion. Journal of Theoretical Politics 18:298–322.Google Scholar
Bretschger, Lucas, and Hettich, Frank. 2002. Globalisation, Capital Mobility and Tax Competition: Theory and Evidence for OECD Countries. European Journal of Political Economy 18:695–716.Google Scholar
Bretschger, Lucas, and Hettich, Frank. 2005. Globalisation and International Tax Competition: Empirical Evidence Based on Effective Tax Rates. Journal of Economic Integration 20:530–542.Google Scholar
Burgoon, Brian. 2001. Globalization and Welfare Compensation: Disentangling the Ties that Bind. International Organization 55:509–551.Google Scholar
Burgoon, Brian. 2012. Partisan Embedding of Liberalism: How Trade, Investment, and Immigration Affect Party Support for the Welfare State. Comparative Political Studies 45:606–635.Google Scholar
Busemeyer, Marius. 2009. From Myth to Reality: Globalisation and Public Spending in OECD Countries Revisited. European Journal of Political Research 48:455–482.Google Scholar
Cao, Xun. 2010. Networks as Channels of Policy Diffusion: Explaining Worldwide Changes in Capital Taxation, 1998–2006. International Studies Quarterly 54:823–854.Google Scholar
Castles, Francis G. 2007. Testing the Retrenchment Hypothesis: An Aggregate Overview. Pp. 19–43 in The Disappearing State? Retrenchment Realities in an Age of Globalisation, edited by Francis G. Castles. Cheltenham: Elgar.Google Scholar
Castles, Francis G. 2009. What Welfare States Do: A Disaggregated Expenditure Approach. Journal of Social Policy 38:45–62.Google Scholar
Clasen, Jochen, and Siegel, Nico A., eds. 2007. Investigating Welfare State Change. The ‘Dependent Variable Problem’ in Comparative Analysis. Cheltenham: Edward Elgar.CrossRefGoogle Scholar
Clausing, Kimberly A. 2008. Closer Economic Integration and Corporate Tax Systems. Global Economy Journal 8:1–22.Google Scholar
Clifton, Judith, Comín, Francisco, and Fuentes, Danial Días. 2006. Privatizing Public Enterprises in the European Union 1960–2002: Ideological, Pragmatic, Inevitable? Journal of European Public Policy 13:736–756.Google Scholar
Conway, Paul, and Nicoletti, Giuseppe. 2006. Product Market Regulation in the Non-Manufacturing Sectors of OECD Countries: Measurement and Highlights, Working Paper No. 530, Paris, OECD Economics Department.Google Scholar
Dahl, Casper Hunnerup. 2014. Parties and Institutions: Empirical Evidence on Veto Players and the Growth of Government. Public Choice 159:415–433.Google Scholar
Devereux, Michael P., Lockwood, Ben, and Redoano, Michaela. 2008. Do Countries Compete Over Corporate Taxes? Journal of Public Economics 92:1210–1235.Google Scholar
Dreher, Axel. 2006a. Does Globalization Affect Growth? Evidence from a New Index of Globalization. Applied Economics 38:1091–1110.Google Scholar
Dreher, Axel. 2006b. The Influence of Globalization on Taxes and Social Policy: An Empirical Analysis of OECD Countries. European Journal of Political Economy 22:179–201.Google Scholar
Dreher, Axel, Sturm, Jan-Egbert, and Ursprung, Heinrich W.. 2008. The Impact of Globalization on the Composition of Government Expenditures: Evidence from Panel Data. Public Choice 134:263–292.Google Scholar
Emmenegger, Patrick. 2007. Parteien und Opportunitätsstrukturen. Die parteipolitischen Determinanten der Staats- und Sozialausgaben. Zeitschrift für Sozialreform 53:79–102.Google Scholar
Fink, Simon. 2011a. A Contagious Concept: Explaining the Spread of Privatization in the Telecommunications Sector. Governance 24:111–139.Google Scholar
Fink, Simon. 2011b. Der Einfluss von Spielarten des Kapitalismus auf Privatisierungspolitik. Ein quantitativer Test. Zeitschrift für Vergleichende Politikwissenschaft 5:277–301.Google Scholar
Franchino, Fabio, and Mainenti, Marco. 2013. Electoral Institutions and Distributive Policies in Parliamentary Systems: An Application to State Aid Measures in EU Countries. West European Politics 36:498–520.Google Scholar
Franzese, Robert J., and Hays, Jude C.. 2006. Strategic Interaction among EU Governments in Active Labor Market Policy-Making. Subsidiarity and Policy Coordination under the European Employment Strategy. European Union Politics 7:167–189.Google Scholar
Ganghof, Steffen. 2000. Adjusting National Tax Policy to Economic Internationalization. Strategies and Outcomes. Pp. 597–645 in Welfare and Work in the Open Economy. Volume 2: Diverse Responses to Common Challenges, edited by Fritz W. Scharpf and Vivien A. Schmidt. Oxford: Oxford University Press.Google Scholar
Garrett, Geoffrey. 1998. Partisan Politics in the Global Economy. Cambridge: Cambridge University Press.Google Scholar
Garrett, Geoffrey, and Mitchell, Deborah. 2001. Globalization, Government Spending and Taxation in the OECD. European Journal of Political Research 39:145–177.Google Scholar
Genschel, Philipp, and Schwarz, Peter. 2011. Tax Competition: A Literature Review. Socio-Economic Review 9:339–370.Google Scholar
Ghinamo, Mauro, Panteghini, Paolo M., and Revelli, Federico. 2010. FDI Determination and Corporate Tax Competition in a Volatile World. International Tax and Public Finance 17:532–555.Google Scholar
Gilardi, Fabrizio. 2010. Who Learns from What in Policy Diffusion Processes? American Journal of Political Science 54:650–666.Google Scholar
Ha, Eunyoung. 2008. Globalization, Veto Players, and Welfare Spending. Comparative Political Studies 41:783–813.Google Scholar
Haupt, Andrea B. 2010. Parties’ Responses to Economic Globalization: What is Left for the Left and Right for the Right? Party Politics 16:5–27.CrossRefGoogle Scholar
Hays, Jude C. 2003. Globalization and Capital Taxation in Consensus and Majoritarian Democracies. World Politics 56:79–113.Google Scholar
Hays, Jude C., Ehrlich, Sean D., and Peinhardt, Clint. 2005. Government Spending and Public Support for Trade in the OECD: An Empirical Test of Embedded Liberalism Thesis. International Organization 59:473–494.Google Scholar
Heinemann, Friedrich, Overesch, Michael, and Rincke, Johannes. 2010. Rate-Cutting Tax Reforms and Corporate Tax Competition in Europe. Economics & Politics 22:498–518.Google Scholar
Henisz, Witold J., Zelner, Bennet A., and Guillén, Mauro F.. 2005. The Worldwide Diffusion of Market-Oriented Infrastructure Reform, 1977–1999. American Sociological Review 70:871–897.Google Scholar
Herwartz, Helmut, and Theilen, Bernd. 2014. Partisan Influence on Social Spending Under Market Integration, Fiscal Pressure and Institutional Change. European Journal of Political Economy 34:409–424.Google Scholar
Hicks, Alexander, and Zorn, Christopher. 2005. Economic Globalization, the Macro Economy, and Reversals of Welfare: Expansion in Affluent Democracies, 1978–94. International Organization 59:631–662.Google Scholar
Höpner, Martin, Petring, Alexander, Seikel, Daniel, and Werner, Benjamin. 2011. Liberalisierungspolitik. Eine Bestandsaufnahme des Rückbaus wirtschafts- und sozialpolitischer Interventionen in entwickelten Industrieländern. Kölner Zeitschrift für Soziologie und Sozialpsychologie 63:1–32.Google Scholar
Iversen, Torben, and Cusack, Thomas R.. 2000. The Causes of Welfare State Expansion: Deindustrialization or Globalization? World Politics 52:313–349.Google Scholar
Jensen, Carsten. 2011. Conditional Contraction: Globalisation and Capitalist Systems. European Journal of Political Research 50:168–189.Google Scholar
Jensen, Carsten. 2012. Labour Market- vs. Life Course-Related Social Policies: Understanding Cross-Programme Differences. Journal of European Public Policy 19:275–291.Google Scholar
Jensen, Carsten, and Seeberg, Henrik B.. 2015. The Power of Talk and the Welfare State: Evidence from 23 Countries on an Asymmetric Opposition–Government Response Mechanism. Socio-Economic Review 13:215–233.Google Scholar
Jensen, Nathan M., and Lindstädt, René. 2012. Leaning Right and Learning from the Left: Diffusion of Corporate Tax Policy across Borders. Comparative Political Studies 19:275–291.Google Scholar
Jordana, Jacint, Levi-Faur, David, and Fernández i Marín, Xavier. 2011. The Global Diffusion of Regulatory Agencies: Channels of Transfer and Stages of Diffusion. Comparative Political Studies 44:1343–1369.Google Scholar
Kammas, Pantelis. 2011. Strategic Fiscal Interaction among OECD Countries. Public Choice 147:459–480.Google Scholar
Keman, Hans. 2011. Third Ways and Social Democracy: The Right Way to Go? British Journal of Political Science 41:671–680.Google Scholar
Kim, Tae Kuen, and Zurlo, Karen. 2009. How Does Economic Globalisation Affect the Welfare State? Focusing on the Mediating Effect of Welfare Regimes. International Journal of Social Welfare 18:130–141.Google Scholar
Kittel, Bernhard. 1999. Sense and Sensitivity in Pooled Analysis of Political Data. European Journal of Political Research 35:225–253.Google Scholar
Kittel, Bernhard, and Obinger, Herbert. 2003. Political Parties, Institutions, and the Dynamics of Social Expenditure in Times of Austerity. Journal of European Public Policy 10:20–45.Google Scholar
Kogut, Bruce, and Macpherson, J. Muir. 2008. The Decision to Privatize: Economists and the Construction of Ideas and Policies. Pp. 104–140 in The Global Diffusion of Markets and Democracy, edited by Beth Simmons, Frank Dobbin and Geoffrey Garrett. Cambridge: Cambridge University Press.Google Scholar
Kulessa, Alexander von, and Wenzelburger, Georg. 2015. Starker Steuerwettbewerb – starke Reformen? Ein neuer Blick auf Unternehmenssteuerreformen in 15 EU-Staaten (1998–2011). Swiss Political Science Review 21:302–332.Google Scholar
Kwon, Hyeok Yong, and Pontusson, Jonas. 2010. Globalization, Labour Power and Partisan Politics Revisited. Socio-Economic Review 8:251–281.Google Scholar
Leibrecht, Markus, and Hochgatterer, Claudia. 2012. Tax Competition as a Cause of Falling Corporate Income Tax Rates: A Survey of Empirical Literature. Journal of Economic Surveys 26:616–648.Google Scholar
Leibrecht, Markus, Klien, Michael, and Onaran, Özlem. 2011. Globalization, Welfare Regimes and Social Protection Expenditures in Western and Eastern European Countries. Public Choice 148:569–594.Google Scholar
Levi-Faur, David. 2003. The Politics of Liberalisation: Privatisation and Regulation-for-Competition in Europe’s and Latin America’s Telecoms and Electricity Industries. European Journal of Political Research 42:705–740.Google Scholar
Liberati, Paolo. 2007. Trade Openness, Capital Openness and Government Size. Journal of Public Policy 27:215–247.Google Scholar
Maggetti, Martino, and Gilardi, Fabrizio. 2016. Problems (and Solutions) in the Measurement of Policy Diffusion Mechanisms. Journal of Public Policy 36:87–107.Google Scholar
Martin, Lanny W., and Vanberg, Georg. 2013. Multiparty Government, Fiscal Institutions, and Public Spending. The Journal of Politics 75:953–967.Google Scholar
Merkel, Wolfgang, Petring, Alexander, Henkes, Christian, and Egle, Christoph. 2008. Social Democracy in Power: The Capacity to Reform. London/New York: Routledge.Google Scholar
Meseguer, Covadonga. 2004. What Role for Learning? The Diffusion of Privatization in OECD and Latin American Countries. Journal of Public Policy 24:299–325.CrossRefGoogle Scholar
Obinger, Herbert, Schmitt, Carina, and Zohlnhöfer, Reimut. 2014. Partisan Politics and Privatization in OECD Countries. Comparative Political Studies 47:1294–1323.Google Scholar
Onaran, Özlem, Boesch, Valerie, and Leibrecht, Markus. 2012. How Does Globalization Affect the Implicit Tax Rates on Labor Income, Capital Income, and Consumption in the European Union? Economic Inquiry 50:880–904.Google Scholar
Osterloh, Steffen, and Debus, Marc. 2012. Partisan Politics in Corporate Taxation. European Journal of Political Economy 28:192–207.Google Scholar
Pitlik, Hans. 2007. A Race to Liberalization? Diffusion of Economic Policy Reform among OECD-Economies. Public Choice 132:159–178.Google Scholar
Plümper, Thomas, Troeger, Vera E., and Winter, Hannes. 2009. Why Is There No Race to the Bottom in Capital Taxation? International Studies Quarterly 53:761–786.Google Scholar
Potrafke, Niklas. 2009. Did Globalization Restrict Partisan Politics? An Empirical Evaluation of Social Expenditures in a Panel of OECD Countries. Public Choice 140:105–124.Google Scholar
Razin, Assaf, Sadka, Efraim, and Swagel, Philip. 2002. The Aging Population and the Size of Welfare State. Journal of Political Economy 110:900–918.Google Scholar
Rickard, Stephanie. 2012. A Non-Tariff Protectionist Bias in Majoritarian Politics: Government Subsidies and Electoral Institutions. International Studies Quarterly 56:777–785.Google Scholar
Roberts, Barbara M., and Saeed, Muhammad A.. 2012. Privatizations around the World: Economic or Political Determinants? Economics & Politics 24:47–71.Google Scholar
Rodden, Jonathan. 2003. Reviving Leviathan: Fiscal Federalism and the Growth of Government. International Organization 57:695–729.Google Scholar
Scharpf, Fritz W. 1999. Governing in Europe: Effective and Democratic? Oxford: Oxford University Press.Google Scholar
Schmidt, Susanne K. 1998. Liberalisierung in Europa: Die Rolle der Europäischen Kommission. Frankfurt/New York: Campus.Google Scholar
Schmitt, Carina. 2013a. Culture, Closeness, or Commerce? Policy Diffusion in Social Spending Dynamics. Swiss Political Science Review 19:123–138.Google Scholar
Schmitt, Carina. 2013b. The Janus Face of Europeanisation: Explaining Cross-Sectoral Differences in Public Utilities. West European Politics 36:547–563.Google Scholar
Schmitt, Carina. 2014. The Diffusion of Privatization in Europe: Political Affinity or Economic Competition? Public Administration 92:615–635.Google Scholar
Schmitt, Carina. 2016. Panel Data Analysis and Partisan Variables: How Periodization Does Influence Partisan Effects. Journal of European Public Policy 23:1442–1459.Google Scholar
Schneider, Volker, and Häge, Frank M.. 2008. Europeanization and the Retreat of the State. Journal of European Public Policy 15:1–19.Google Scholar
Schneider, Volker, Fink, Simon, and Tenbrücken, Marc. 2005. Buying Out the State: A Comparative Perspective on the Privatization of Infrastructures. Comparative Political Studies 38:704–727.Google Scholar
Schuster, Philipp, Schmitt, Carina, and Traub, Stefan. 2013. The Retreat of the State from Entrepreneurial Activities: A Convergence Analysis for the OECD Countries, 1980–2007. European Journal of Political Economy 32:95–112.Google Scholar
Simmons, Beth, Dobbin, Frank, and Garrett, Geoffrey. 2006. Introduction: The International Diffusion of Liberalism. International Organization 60:781–810.Google Scholar
Starke, Peter. 2006. The Politics of Welfare State Retrenchment: A Literature Review. Social Policy & Administration 40:104–120.Google Scholar
Strøm, Kaare. 1990. A Behavioral Theory of Competitive Political Parties. American Journal of Political Science 34:565–598.Google Scholar
Swank, Duane. 2006. Tax Policy in an Era of Internationalization: Explaining the Spread of Neoliberalism. International Organization 60:847–882.Google Scholar
Swank, Duane. 2016. Taxing Choices: International Competition, Domestic Institutions and the Transformation of Corporate Tax Policy. Journal of European Public Policy 23:571–603.Google Scholar
Swank, Duane, and Steinmo, Sven. 2002. The New Political Economy of Taxation in Advanced Capitalist Democracies. American Journal of Political Science 46:642–655.Google Scholar
Tsebelis, George. 2002. Veto Players: How Political Institutions Work. Princeton, N.J.: Princeton University Press.Google Scholar
Vis, Barbara, and van Kersbergen, Kees. 2007. Why and How Do Political Actors Pursue Risky Reforms? Journal of Theoretical Politics 19:153–172.Google Scholar
Ward, Hugh, Ezrow, Lawrence, and Dorussen, Han. 2011. Globalization, Party Positions, and the Median Voter. World Politics 63:509–547.Google Scholar
Winner, Hannes. 2005. Has Tax Competition Emerged in OECD Countries? Evidence from Panel Data. International Tax and Public Finance 12:667–687.Google Scholar
Wolf, Frieder. 2010. Enlightened Eclecticism or Hazardous Hodgepodge? Mixed Methods and Triangulation Strategies in Comparative Public Policy Research. Journal of Mixed Methods Research 4:144–167.Google Scholar
Zahariadis, Nikolaos. 2010a. Discretion by the Rules: European State Aid Policy and the 1999 Procedural Regulation. Journal of European Public Policy 17:954–970.Google Scholar
Zahariadis, Nikolaos. 2010b. State Aid and Partisan Government in the European Union. Social Science Quarterly 91:436–454.Google Scholar
Zohlnhöfer, Reimut. 2009. How Politics Matter when Policies Change: Understanding Policy Change as a Political Problem. Journal of Comparative Policy Analysis 11:97–115.Google Scholar
Zohlnhöfer, Reimut, Wenzelburger, Georg, and Wolf, Frieder. 2013. Political Parties and Pension Generosity in Times of Permanent Austerity. World Political Science Review 9:291–318.Google Scholar
Zohlnhöfer, Reimut, Obinger, Herbert, and Wolf, Frieder. 2008. Partisan Politics, Globalization, and the Determinants of Privatization Proceeds in Advanced Democracies (1990–2000). Governance 21:95–121.Google Scholar
Supplementary material: PDF

Zohlnhöfer supplementary material

Appendix

Download Zohlnhöfer supplementary material(PDF)
PDF 301.8 KB