The Competitiveness of Industrialised Welfare States: A Cross-country Survey

Abstract

Are advanced capitalist countries who have a fully-fledged expensive welfare state in general less competitive than those who score low on welfare statism? The case is far from obvious as the highly developed Northern and Central European welfare states have throughout most of the post-war period been among the most affluent countries of the world — while being strongly exposed to international competition (cf. Katzenstein, 1985). However, there is contradictory evidence. too. The USA and the United Kingdom, for instance, emerged in certain respects as above-the-average performers in the wake of their anti-welfare policies. The economies of Sweden and West Germany, two of the most notorious welfare states, have for a long time been among the least dynamic ones in the industrialised world.