The Transformation of Government Intervention in the Economy in Advanced Democracies

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Can globalization, Europeanization, learning and emulation as well as socio-economic problems explain the changes in government intervention in the economy in the areas of business taxation, government spending, privatization, subsidies and market regulation in the advanced democracies? This question will be investigated in the project. This question will be tackled in three steps. First, unconditional effects of the drivers of change on the individual policies will be analyzed. From a political science perspective, however, it seems likely that domestic factors will filter the effects of these drivers of change. Therefore, in a second step these conditional effects will be tested. I will focus on the partisan complexion of government, party competition and veto players here. In the third step, I will investigate in how far it is justified to talk about changes in “the” interventionist state. This will be done in three distinct ways. First, I will analyze if the various interventionist policies indeed display similar dynamics, i.e., if the same factors help explain the changes in these policy instruments. Second, I will take a disaggregated view and analyze patterns of regulation, subsidization and privatization at the sectoral level and various spending items separately, to find out whether the same variables drive the liberalization process across different sectors and spending categories. Third, I will look at the development of the interventionist state as such, i.e. on an aggregated level and will seek to analyze the main determinants of this overall development of government intervention. By answering these questions, the project will contribute to the literature in manifold ways, as extant research mostly focusses on the unconditional effects of the drivers of change on the extent of changes in individual policy instruments. Therefore, new insights can be expected firstly regarding the question whether domestic factors systematically filter the effects of the drivers of change. Secondly, the comparative analysis of the different interventionist policy instruments as well as the disaggregated analysis will generate new findings, which will contribute to a more nuanced understanding of these processes of policy change. Thirdly, the aggregate analysis of the interventionist state allows to better understand the overall process of liberalization. Fourthly, I will systematically investigate if the financial crisis of 2007ff. has interrupted or even reversed the trend of liberalization of the previous 25 years – which has not been done in the literature so far, either. Fifthly, I will fill an important void by collecting data on two privatization indicators (privatization proceeds and the importance of state-owned enterprises in the economy) which have not been updated anymore for a decade or more. Moreover, these contributions should also allow me to sort out at least some of the contradictions that currently prevail in the literature.