On the political economy of recent public sector development

This paper starts from a major contradiction in the literature on recent pu blic sector development. On the one hand, globalization theory is read as i mplying major tendencies towards the retrenchment of the public sector and a 'race to the bottom' in social spending. On the other hand, comparative s tudies are largely unanimous in arguing that such tendencies have not occur red. To gain greater purchase on the realities of recent public sector tren ds, we disaggregate data for public expenditure change in 19 OECD countries over the period 1984 to 1997. We then develop a series of models of the fa ctors determining expenditure trends over this period. The findings present ed here provide no evidence that exposure to international trade leads gove rnments to down-size their public sectors and suggest that the main influen ces on contemporary expenditure patterns have been unemployment, economic g rowth and catch-up from prior expenditure level.