Investigating Social Policy Competition in Latin America: An Evaluation of Health, Education and Social Protection Expenditure

Abstract

A prevalent concern in development economics is that globalisation leads to a race to the bottom in public services. While research has been done to evaluate this in the areas of labour standards, taxation and environmental regulation, no studies have attempted to empirically evaluate this in the area of social expenditure. Rather than a “race to the bottom”, this research paper investigates the prospect of social expenditure competition in Latin America. Using a panel of 20 Latin American countries between 2000 and 2020, this study attempts to quantitatively evaluate the existence of a relationship between government expenditures on health, education and social protection between countries. Using dynamic panel estimation, this research finds no substantial quantitative evidence that social expenditure competition exists between Latin American countries. Additionally, it substantiates the work of previous scholars in finding that institutional and macroeconomic factors may predict social expenditure more consistently than social expenditure in other countries. The paper recommends that similar quantitative analyses be conducted in other regions to verify this, and that more quality data be collected and circulated to facilitate further research.