Scholars from a number of disciplines have argued that the massive expansion of the welfare state in the postwar period was at least in some part a byproduct of the cold war and the associated political competition between two rival regime blocs. However, the question of whether regime competition fuelled welfare-state growth has never been subject to systematic examination. Applying spatial econometrics, this article offers the first empirical test of this argument. The authors' findings support the notion that regime competition stimulated the expansion of the welfare state on both sides of the Iron Curtain in the postwar period.