Globalisation and the welfare state

A new focus paper published by Bertelsmann Stiftung's GED projectsuggests that the complementarity between openness to trade and a strong welfare state weakened over time. While trade – the key driver of globalisation – improves net welfare, it comes with increased vulnerability to external shocks, decline of certain sectors of the economy, etc. In order to insure against these side-effects, a strong welfare state is needed. However, while globalisation is accelerating, the welfare state stagnates.

Globalization.  Photo copyright: Woplu on flickr (CC BY-NC-ND 2.0)

Globalization.  Photo copyright: Woplu on flickr (CC BY-NC-ND 2.0)