Economic Openness. Social Expenditure and Credible Commitments

Seminar paper from the year 2017 in the subject Politics - Basics and General, grade: 1,0, Christian-Albrechts-University of Kiel, language: English, abstract: The aim of this paper is to study the relationship between globalization, government expenditure and credible commitments of the government.

Moreover, the hypothesis that states increase social spending to build support for increasing economic openness was tested. The study is deeply grounded in an extensive literature on the research works in the related area and on compensation hypothesis, efficiency hypothesis, and credible commitment hypothesis. An empirical analysis of economic and social data of twenty-three OECD countries was performed for the period between 1960 and 2013 to test the hypothesis.

The hypothesis, more government expenditure leads to greater globalization was not rejected. Hence, it was proved by empirical investigation that more social expenditure leads to more economic openness.