Trade, Social Insurance, and the Limits to Globalization
International economic integration increases exposure to external risk and intensifies domestic demands for social insurance through government programs. But international economic integration also reduces the ability of governments to respond to such pressure by rendering the tax base footloose. With globalization proceeding apace, the social consensus required to maintain domestic markets open to trade may erode to the point where a return to protection becomes a serious possibility.
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"Why do More Open Economies Have Bigger Governments?,"
CEPR Discussion Papers
1388, C.E.P.R. Discussion Papers.
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