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Globalization, government spending and taxation in the OECD
Author(s) -
GARRETT GEOFFREY,
MITCHELL DEBORAH
Publication year - 2001
Publication title -
european journal of political research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.267
H-Index - 95
eISSN - 1475-6765
pISSN - 0304-4130
DOI - 10.1111/1475-6765.00573
Subject(s) - economics , globalization , foreign direct investment , consumption (sociology) , government spending , capital (architecture) , labour economics , investment (military) , international economics , welfare , monetary economics , market economy , macroeconomics , history , social science , archaeology , sociology , politics , political science , law
. This article assesses the impact of globalization on welfare state effort in the OECD countries. Globalization is defined in terms of total trade, imports from low wage economies, foreign direct investment, and financial market integration. Welfare effort is analyzed in terms both of public spending (and separately on social service provision and income transfer programs) and taxation (effective rates of capital taxation and the ratio of capital to labor and consumption taxes). Year–to–year increases in total trade and international financial openness in the past three decades have been associated with less government spending. In contrast, integration into global markets has not been associated either with reductions in capital tax rates, or with shifts in the burden of taxation from capital to consumption and labor income. Moreover, countries with greater inflows and outflows of foreign direct investment tend to tax capital more heavily.