Late Industrializers and the Development of the Welfare State

In this paper, the author reviews the social policy experiences of several waves of “late industrializers” in Europe, Latin America and Southeast Asia, and explores some of the relevant issues for the study of welfare state development. Why did some later industrializers favour the early adoption of social welfare measures? Did they have distinctive social coalitions or institutional opportunities that exerted pressure for the early adoption of such measures? Were there state-building initiatives or attempts to exploit or even capture an administrative capacity that was already in place? The paper begins with what is generally considered the “homeland” of the welfare state: Northern Europe. It then reviews the experience in East Asia and Latin America in subsequent sections, and considers the recent experience of social policy development in sub-Saharan Africa.

Pierson looks at the relationship between late industrialization and welfare in these varied contexts and over a period of more than a century. He identifies certain commonalities across all later industrializers, including considerable evidence of “institutional learning”. There are certain advantages in being a late-developing welfare state, and a number of states have used an active social policy as a mechanism for promoting their own social and economic development.

Generally, the welfare states of later industrializers have been smaller (at least in terms of proportionate levels of social expenditure) and have done less redistribution work. In general, the larger and more entrenched a welfare state becomes, the more difficult it is to change. There is thus a case for thinking that successful late industrializers may have lessons for more es-tablished welfare regimes. East Asia’s emphasis on the regulatory (rather than the providing) welfare state and its prioritization of education and labour market participation, for example, have become key elements in the reform agenda of the older welfare states of Western Europe. Late-developing welfare states have always been strongly influenced both by the example of developed welfare states elsewhere and by the promptings of international agencies. The World Bank now gives welfare and social security more or less equal billing with the imperatives of economic growth and the formation of human capital. Its does not, however, simply call for greater state involvement. Given the importance of the stance of international financial insti-tutions for states that aspire to industrialize (and correspondingly to refashion their domestic social policy), such a shift in focus is highly important.

In relation to sub-Saharan Africa, Pierson finds that it is unlikely that most states in the region have the governing capacity or the resources to administer complex social security systems. In the short term, however, the issue is one of finding the most effective means of addressing high levels of absolute insecurity, rather than constructing a welfare state in its traditional form (of social insurance linked to participation in the formal economy).

The size of the state has not been the crucial issue. Although detractors of an extensive welfare regime have pointed to the smallness of welfare states in Southeast Asia, the most successful economies in the region have developed quite substantial welfare regimes—a fact that is sometimes masked by the conventions that determine what is to count as social expenditure. Of course, even the most successful states were not immune to cronyism and capture by special interests, but welfare regimes in the least successful states appear to have been systematically undermined by these tendencies.