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Emerging Welfare States in Latin America and East Asia

Abstract and Keywords

Building an effective welfare state requires the presence of an effective state. This chapter focuses on the countries with comparatively effective states and the most advanced welfare states in the Global South: Argentina, Brazil, Chile, Costa Rica, Uruguay, South Korea, and Taiwan. These countries followed different paths to welfare state development, linked to democratization or to co-optation of labor under authoritarian auspices, and the East Asian countries followed these paths significantly later than the Latin American countries. During democratic periods, political parties and advocacy groups were the key actors promoting the different options. At each step, policy legacies from previous periods shaped the range of policy options considered. The recent turn to basic universalism in Latin America is linked the increase in the strength of left parties and their control of government. The delay of welfare state expansion in East Asia is related to the weakness of left parties there.

Keywords: welfare state, welfare state development, East Asia, Latin America, political parties, democratization

As the Introduction to Part V (Lange, Chapter 36, this volume) lays out, the array of states in the Global South ranges from failed and predatory states to developmental and incipient welfare states. Incipient welfare states are to be found in the most advanced countries of East Asia and Latin America. Welfare states provide contributory social insurance, non-contributory social assistance, and social services—from health and education to childcare and elderly care. The extent of coverage and the structure and generosity of the benefits combine to define the effectiveness of the welfare state in keeping people out of poverty and building human capital.

The prerequisite for building an effective welfare state is the presence of an effective state. The state’s capacity to extract and allocate resources in a deliberate manner has to grow if social policy is to expand and become effective in promoting human welfare and the accumulation of human capital. This in turn has implications for state structure, as the administrative apparatus has to be strengthened. An effective welfare state in turn is an essential component of the new developmental state because, as Peter Evans and Patrick Heller (Chapter 37, this volume) make clear, the new developmental state puts a premium on human capital.

This chapter focuses on the countries with the most advanced welfare states in the Global South: Argentina, Brazil, Chile, Costa Rica, Uruguay, South Korea, and Taiwan. These countries followed different paths to welfare state development, linked to democratization or to co-optation of labor under authoritarian auspices, and the East Asian countries followed these paths significantly later than the Latin American countries. Over the past three decades, different economic trajectories variously favoured retrenchment or expansion of social policy regimes, but in the most recent period developments in both regions have tended in a more universalistic direction than ever before. Gender issues have also begun to form part of the agenda.

At each step, policy legacies from previous periods shaped the range of policy options considered. During democratic periods, political parties and advocacy groups were the (p. 797) key actors promoting the different options. The recent turn to basic universalism in Latin America is linked to the “left turn,” that is, the increase in the strength of left parties and their control of government. The delay of welfare state expansion in East Asia is related to the weakness of left parties there.

We will portray this development in the two world regions in three steps—up to 1980, 1980 to 2000, after 2000 (Sections 1–3)—and then discuss the emerging issues (Section 4).

1 Social Protection Systems up to 1980

Latin America

Latin American states launched social protection systems in a context of dependent development, unstable and restricted democracy, and weak labor movements and leftist parties. In the more economically advanced countries, import substitution industrialization (ISI) strategies financed social security systems in the 1930s and 1940s through a combination of employer, employee, and state contributions. This legacy resulted in fragmented and stratified systems that resembled the Bismarckian type of welfare state, which was based on the social insurance principle (Esping-Andersen 1990; Huber 1996; Huber and Stephens 2001). Social protection was not a citizenship right, and the informal and rural sectors were generally excluded. No land reforms were implemented, and the rural sector—other than the landlords—by and large remained politically excluded.

Carmelo Mesa-Lago’s (1978) foundational work discusses how pressure groups and power politics account for the high levels of fragmentation: these systems virtually uniformly protected the most powerful groups first, such as the military, the judiciary, and top-level civil servants; then they gradually covered pivotal middle and working class sectors, such as bankers, teachers, and railroad workers; and finally they expanded to middle and working classes more broadly. Stephan Haggard and Robert Kaufman (2008) incorporate the roles of fiscal capacity, political institutions, and democracy. Evelyne Huber and John Stephens (2012) demonstrate that democracy in the long run favors the expansion of welfare states, in part because it enables groups representing the poor to organize and center-left parties to consolidate.

Chile, Uruguay, Costa Rica, Argentina, and Brazil developed the most advanced welfare states (Mesa-Lago 1978; Huber and Stephens 2010, 2012). In Uruguay, 90 percent of the economically active population were covered in the 1970s, 85 percent in Brazil, 75 percent in Chile, and 70 percent in Argentina. Costa Rica’s 40 percent coverage expanded in the 1970s (Mesa-Lago 1994: 22). There were two distinct paths towards social state expansion within this group. Uruguay, Costa Rica, and Chile adopted a democratic competitive path, while Brazil and Argentina followed a cooptation of labor path (Huber 1996).

By the late 1950s, Uruguay had an employment-based social insurance scheme and a small non-contributory safety net of pensions for elderly, indigent, and disabled people; a maternal healthcare program; an extensive system of public hospitals; and universal free, secular primary education (Papadópulos 1992: 45; Filgueira 1995). The combination of a center-left party named the Colorado Party, pressures from the existing pension beneficiaries, and the presence of a mobilized urban labor sector in the 1920s accounts for (p. 798) these developments (Mesa-Lago 1978). At the same time, urbanization had promoted the mobilization of a mass electorate (Rueschemeyer et al. 1992). Chile was perhaps the most fragmented and least egalitarian system of all five cases. The high level of segmentation responded, in part, to the highly decentralized and politically diverse labor movement (Huber 1996: 148). Although different health services were unified (in 1952) and further expanded, all efforts to unify the pension system failed before Pinochet’s dictatorship (Borzutzky 2002; Castiglioni 2005). The Costa Rican welfare state developed in the absence of high economic development (Segura-Ubiergo 2007: 64). Given its universalization of healthcare and overall low degree of fragmentation of social security, it resembled a social democratic welfare state. The role of the social democratic party Partido de Liberación Nacional (Lehoucq 2010; Martínez-Franzoni 2010) and the strength of civil society (Huber and Stephens 2012) were pivotal for the early consolidation of democracy and the universalization of the social protection system.

In contrast to Costa Rica, Uruguay, and Chile, powerful leaders—Juan Perón and Getúlio Vargas—mobilized and co-opted the newly organized urban working classes in Argentina and Brazil (Collier and Collier 1991). In the context of ISI and an expanding urban labor force, the Peronist Party in Argentina established a major social protection system that included pensions, as well as the expansion of the union-run mutual health insurance (obras sociales) and the public hospitals (Rock 1985; Lloyd-Sherlock 2000). Vargas’ regime (1930–45) in Brazil placed the foundation for urban sector incorporation in the social security system, and the military’s bureaucratic-authoritarian regime expanded coverage to the rural sector in 1971. Paternalistic leaders co-opted the rural sector and labor organizations (Malloy 1979). The results in both cases were significant but highly stratified, and they fragmented social protection systems.

East Asia

Welfare state formation in East Asia was delayed because these countries were all affected by the Cold War and came to be ruled by profoundly conservative governments, though in most cases governments strongly committed to economic development. These governments established controls over labor and repressed leftist political parties, thus preventing the emergence of popular pressures for the construction of welfare states. South Korea and Taiwan became the trailblazers in economic development, pursuing a growth model based on manufacturing exports beginning in the 1960s. Thus, in order to understand the emergence of incipient welfare states in East Asia in comparison to the more advanced states in Latin America, we focus on South Korea and Taiwan.

The authoritarian states in South Korea and Taiwan were fundamentally shaped by the confrontation with their communist adversaries. They were above all concerned with national security and national development. They repressed left-wing political forces and controlled labor, but they had initially carried out important land reforms that laid the groundwork for much less unequal distributions of income than in Latin America.

These regimes put social policy in the service of economic development and thus concentrated heavily on investment in education and training (Rieger and Leibfried 2003: 254 ff.). Public health measures, such as vaccination, health education, and basic primary care, which also constitute an investment in human capital, were expanded to rural areas, (p. 799) but publicly mandated health insurance remained very limited. Scholars described these social states as productivist welfare regimes (Holliday 2000; Gough 2004). In Taiwan, government employees and employees of large enterprises received health insurance and pensions, but coverage remained highly restricted (Wong 2004: 8). In South Korea, all enterprises with more than 500 workers were required to provide health insurance in 1977, followed by the public sector in 1978. In both countries, elementary school was compulsory, and the governments invested in primary and secondary education (McGuire 2010: 189, 209). Social assistance was limited to very basic poor relief (Goodman and Peng 1996; Peng and Wong 2008, 2010).

The contrast in terms of coverage with Latin America is stark: in 1980, Taiwan’s GDP per capita, adjusted for purchasing power parities, stood at $8,000, Brazil’s at $6,070, Uruguay’s at $5,872, and South Korea’s at $5,750 (Haggard and Kaufman 2008: 373), but the coverage rates for social insurance were 17, 85, 90, and 24 percent, respectively. The social safety net outside of employment was the family. This state of affairs was to change rapidly in the 1980s as a result of popular mobilization and democratization.

Three crucial differences from Latin America kept inequality much lower: the development of the rural sector in the wake of the land reforms and subsequent investment in the sector, the high level of employment in industry, and the investment in primary and secondary public education. Better conditions in the rural sector, including an expansion of education that reduced rural illiteracy to 10 percent by 1970 in South Korea (Teichman 2012), and higher industrial employment prevented the emergence of the large reserve armies of unemployed rural-urban migrants that characterized many Latin American countries.

2 Social Protection Systems, 1980–2000

Latin America

The 1980s in Latin America are called the lost decade because of the regional debt crisis. Due in part to the debt crisis, many of the region’s authoritarian regimes became destabilized. Argentina, Uruguay, Brazil, and Chile all made the transition to democracy during that decade. However, democratization did not generate social policy expansion in the short run, because the democratic governments also faced severe economic constraints and pressures from international financial institutions (IFIs) for austerity and neoliberal reforms. Counter-pressures were feeble because labor movements and the left had been and continued to be weakened by repression and market-oriented reforms, which reduced the size of industrial and public sectors and expanded the informal sector. Social security systems were in crisis, especially in pioneering countries, due to a declining ratio of workers to pensioners and low levels of contribution (Cruz Saco and Mesa-Lago 1998: 7–8; Kay 1999: 406). In this context, the 1980s and 1990s were decades of overall retrenchment of welfare states.

The IFIs’ prescriptions influenced policies mostly through the conditionality of funds, but also through networks of technocrats who had studied in the same universities (Teichman 2001). These prescriptions entailed reduction of government expenditure, privatization, deregulation, and liberalization of trade and financial markets. The blueprint (p. 800) for social policy reform was to narrowly target the provision of social assistance, partially or fully privatize social security, and increase the participation of private providers in healthcare and education. Nine Latin American countries fully (e.g. Chile) or partially (e.g. Argentina, Uruguay, and Costa Rica) privatized their pension systems between 1981 and 2001 (Isuani and San Martino 1993; Kay 1999; Madrid 2003; Martínez Franzoni and Mesa-Lago 2003; Draibe 2004; Mesa-Lago 2008; Pribble 2008).

The blueprint for health reforms was not as straightforward as that of the pension reform, and the number of stakeholders was also higher (Cruz Saco and Mesa-Lago 1998; Kaufman and Nelson 2004; Huber and Stephens 2012). Reforms in education tended towards territorial decentralization of responsibility and did not necessarily produce state retrenchment. The most dramatic changes took place in Chile, where Pinochet decentralized education and weakened teachers’ unions by turning educators into municipal employees. He also segmented education between fully public schools, publicly subsidized private schools, and fully private schools. The quality and accessibility of educational institutions were inversely correlated. Conversely, Argentina, Uruguay, and Brazil strengthened public education in the 1990s.

The implementation of these prescriptions varied widely among cases, from orthodox shock therapy to gradualism. Such variation was influenced by the extent of each country’s room to maneuver, differing policy legacies, and the balance of power between supporters and opponents of the reforms (Huber and Stephens 2012). Countries with larger economies, such as Argentina and Brazil, enjoyed more leverage with IFIs than smaller economies. In contexts where pensions offered wide coverage, had matured, and ran large deficits, the pressures to reform were more intense (Madrid 2003). At the same time, the broad coverage of the pension system made reform difficult. The influence of the balance of power on the implementation of “Washington Consensus” reforms is best represented by two opposing contexts, Chile and Brazil. Chile was an extreme neoliberal reformer in part because Pinochet’s dictatorship wielded significant executive power; conversely, union pressures and a lack of partisan control in Congress hindered Brazilian presidents from enacting such prescriptions. Brazil’s 1988 democratic Constitution offered a window of opportunity for creating a unified health system and expanding non-contributory pensions. Although legislation took years to be fully implemented, this legacy set a precedent for Brazil’s social protection evolution.

The main outcome of trade and labor market reforms was the loss of industrial jobs and the increase in the number of workers in the informal sector. Accordingly, contributors to the social security system decreased to between 45 and 60 percent of the labor force. Social assistance remained targeted on the extremely poor and generally cost less than 1 percent of GDP. Poverty and inequality levels increased, and public hospitals and clinics were severely underfunded.

East Asia

In the 1980s, South Korea and Taiwan began to democratize, and at the same time social policy began to expand very significantly. The East Asian countries continued to grow rapidly until the financial crisis of 1997. Thus, whereas Latin American countries labored under IFIs’ pressures, South Korea and Taiwan maintained the capacity to shape their (p. 801) social policy regimes in a more autonomous fashion. The 1997 financial crisis constituted an economic shock to the region, but recovery was relatively fast. Given the still young social security systems, they could not be blamed for contributing to the crisis—as they were in Latin America—and, accordingly, the crisis stimulated pressures for further expansion of social policy, rather than for cutbacks, as in Latin America.

In Korea, protest movements and strikes involving labor unions, students, and middle class groups pushed the authoritarian regime to announce presidential elections for December 1987. In anticipation of these elections, the government announced its intention to expand health insurance and establish a national pension scheme (Haggard and Kaufman 2008: 229–230; Peng and Wong 2008, 2010). Roh Tae Woo, the conservative winner of the elections, then extended health insurance to rural and urban self-employed, and he made pension coverage mandatory for all firms with ten, and later five or more, workers. Joseph Wong (2004: 72–73) points out that the expansion of health insurance had a strong patronage component, building support for Roh among regional political elites. The 1992 presidential elections brought more campaign promises for social policy innovation. The winner introduced unemployment insurance linked to active labor market policies and extended pension coverage to farmers, fishermen, and the rural self-employed.

Democratization in Taiwan was a longer, drawn-out process, managed largely from above by the Kuomintang (KMT). Accordingly, social policy expansion was slower than in South Korea. In 1986, the opposition Democratic Progressive Party (DPP) was legally recognized. In 1987, the KMT government lifted martial law, but full free elections for central government bodies were not held until 1991 and 1992; president elections were not held until 1996. The KMT remained electorally successful, and it was only in 2000 that the DPP candidate won the presidency. Anticipating growing political competition, the KMT government in 1986 announced the introduction of a national healthcare system. The system was designed to universalize coverage through a single-payer plan. It took until 1995 to be implemented, but the use of services escalated rapidly and—in the absence of effective cost controls—pushed the program into deficit by 1998. These financial problems generated proposals for partial privatization, which, however, were vigorously opposed in the legislature and by civil society groups, and therefore went nowhere (Wong 2004: 113–130). In the area of pensions, several DPP candidates in local elections in 1993 proposed non-contributory old-age allowances, and the KMT responded with means-tested pensions (Haggard and Kaufman 2008: 227).

In South Korea, democratization and the expansion of social policy were both driven from below by pressures from civil society and opposition leaders, who then formed opposition parties. In Taiwan, democratization was more managed by the incumbent KMT, but pressures from the opposition DPP, and increasingly from mobilized groups in civil society, were important for moving the process forward and for linking it to a transformation of social policy. Given the history of authoritarianism, strident anti-communism, and state control of organized labor, there was no space in either country for the emergence of left-wing parties with strong social bases. Accordingly, socio-economic cleavages were not politicized and were not the basis for party alignments. Given the demands from civil society for better social protection and social services, politicians from all parties perceived electoral opportunities in the form of promises for expansive social policy measures (Wong 2004: 138–142). The context of strong economic growth mitigated the trade-off pressures and potential resistance from privileged groups (Haggard and Kaufman 2008: 221–232).

(p. 802) 3 Social Protection Systems since 2000

Latin America

By the late-1990s, discontent with the effects of market-oriented policies, combined with the progressive consolidation of democracy, facilitated the rise of left-of-center governments. In 2010, ten Latin American countries and two-thirds of Latin America’s population were headed by left governments (Weyland et al. 2010). These governments, buoyed by the 2003–07 commodity export boom, were able to increase their autonomy from the IFIs and govern on a left platform (Levitsky and Roberts 2011: 2, 11). Uruguay, Chile, Brazil, and, to a lesser extent, Argentina and Costa Rica, introduced significant reforms towards basic universalism, understood as a principle that stated that not only should everybody have the right to basic welfare, but also that social policies should be good-quality and broadly targeted (Molina 2006). Nevertheless, the degree to which these countries moved towards basic universalism was shaped by their policy legacies and the character of their political parties (Pribble 2008, 2013).

In Costa Rica, there was mainly continuity in terms of social policy. The expansion of primary healthcare was built upon the unified healthcare system that had been developed by the social democratic PLN (Martínez-Franzoni 2010) and thus did not encounter effective opposition from private providers. Similarly, in Uruguay the privatization of social policy had been limited, and social assistance pensions already covered a significant part of the population (Castiglioni 2010). Unlike Costa Rica, however, Uruguay did embark on comprehensive reforms in the 2000s. The Frente Amplio, a mass-organic party with strong ties to civil society organizations, introduced the most social democratic reforms in the region (Pribble and Huber 2011). For example, their Plan Equidad considerably increased the value of non-contributory family allowances for one third of Uruguayan families (Amarante et al. 2008), and their health reform unified and equalized financing.

The Socialist Party in Chile implemented less ambitious policies, in part due to the electoral-professional character of the party, which had no ties to civil society organizations, and in part due to previous policies that had strengthened private providers (Huber et al. 2010). The 2008 pension reform guaranteed coverage to people in the bottom 60 percent of income earners. The health-sector reform provided universal coverage for a list of the most common illnesses, 69 by 2010. Due to opposition from private providers and insurers, the introduction of a solidarity fund for risk-pooling failed (Dávila 2005). Finally, the Lagos administration introduced Chile Solidario, a program that provided income security and access to basic social services to the extreme poor.

Brazil also expanded its welfare state after the left-wing party PT came to power in 2002, deepening a trend that had started under Fernando Henrique Cardoso. Of particular importance had been Cardoso’s expansion of secondary education. Similar to Uruguay’s Frente Amplio, the PT enjoyed strong support from popular social movements (Hunter 2010). Lula’s major social policy achievement was the expansion of the conditional cash transfer program Bolsa Família to 13 million families, or 23 percent of all Brazilian families, in 2011. Different analyses have evaluated the program as being free overall from clientelistic machines (Hunter and Sugiyama 2009; Zucco 2013). The health sector saw improvements (p. 803) through increased funding and access to primary and preventive healthcare. The pension reform imposed stronger limits on benefit ceilings and equalized the benefits for new entrants to the public and private sectors. Finally, the legal minimum wage, which is also used to value many transfers targeted to the poor, has been consistently increasing since the administration of Lula’s predecessor Cardoso (Kingstone and Ponce 2010: 113).

In Argentina, social policies also expanded but have questionable financial sustainability (Cruces et al. 2008; Garay 2010; Niedzwiecki 2010a, b). In 2008, Cristina Kirchner’s government renationalized the pension system (Arza 2009; Kay 2009), and previous pension reforms by Néstor Kirchner had expanded coverage to those with insufficient contributions in exchange for a payment plan. In terms of social assistance, following the legacy of the 2002 emergency program, a more ambitious program was created in 2009, which came to cover 3.6 million children by 2011 (Ministerio de Trabajo 2011). In healthcare, first aid kits were distributed to the primary health centers, and public clinics and hospitals began to be reimbursed for services for uninsured pregnant women and children under the age of six, which greatly increased the take-up rate.

The trend towards more broadly targeted social policies, increases in the minimum wage, the expansion of secondary education, and periods of economic upturns contributed to the decrease in overall levels of poverty and inequality (López-Calva and Lustig 2010). However, in spite of efforts to equalize the quality of education in Chile, Uruguay, and Argentina, none of these countries has altered the structural inequities of its respective system. In addition, Chile and Uruguay’s health reforms and Argentina’s non-contributory pensions do not cover informal sector workers above the poverty line (Arza 2009: 2; Huber and Stephens 2012). The increasing size of the informal sector remains a key challenge for these countries. Left parties need to represent the interests of both their traditional organized constituencies and the unemployed and community-based social movements, such as unemployed groups in Argentina, the landless in Brazil, and indigenous movements in Bolivia (Anria and Niedzwiecki 2011; Etchemendy and Garay 2011; Hunter 2011).

East Asia

Despite the considerable expansion of social policy in South Korea and Taiwan in the 1980s, their welfare states remained incomplete by the late 1990s (Kwon 2005a; Ringen et al. 2011). The 1997 financial crisis exposed these weaknesses; it caused rising unemployment, atypical employment, and poverty, and increased pressures for social policy innovation and expansion. This stimulated a response in the form of unemployment insurance and active labor market policy (Lue and Park 2013). Political change in both countries added to the impetus for reform. Democratization had made it possible for opposition parties to strengthen their organizations and begin to win elections at various levels, even including the presidential level. Grassroots organizations supporting social policy reform had likewise been able to strengthen, form larger coalitions, and ultimately reach important positions in government and the bureaucracy. These groups included feminists, and as a result gender issues were put on the social policy agenda in the first decade of the twenty-first century (Peng 2004: 414–415).

In South Korea, the crisis coincided with the presidential election in December 1997, in which a longtime leader of the opposition, Kim Dae-Jung, won the election. In Taiwan, it (p. 804) was followed in 2000 by the election of Chen Shui-Bian, the first DPP candidate to win the presidency. Though neither one of these presidents had a conventional left ideology, platform, or party base, they were both concerned with and campaigned on making improvements in social policy in a more inclusive and egalitarian direction. They also both sought to forge a compromise among key stakeholders by including them in discussions of reform proposals.

Kim Dae-Jung formed a tripartite commission with representatives of the government, employers, and both major trade union confederations in 1998. This commission reached an agreement under which the unions accepted labor market flexibilization in exchange for an expansion of unemployment insurance, employment services, and social assistance. The government also launched a series of public work projects to deal with the sharp rise in unemployment (Wong 2004: 97). In 2000, legislation was passed that ensured a means-tested allowance to every citizen and improved the value of this benefit (Kwon 2005b: 491). This was an important change, as before this point, non-poor family members had been held responsible for taking care of destitute elderly.

The health insurance system suffered from fragmentation, inequality of benefits, and extremely high out-of-pocket expenses. Efforts to unify the many funds had faltered repeatedly because of resistance from providers and administrators. Under Kim Dae-Jung, the advocacy coalition behind unification gained sufficient political support to push administrative unification through (Wong 2004: 87–98). Nevertheless, financial unification of the healthcare funds was not completed because of opposition in the legislature (Kwon 2005b: 491).

Before his election to the presidency of Taiwan, Chen Shui-Bian had undertaken a study tour of Europe and become acquainted with British Prime Minister Tony Blair’s Third Way. The Third Way’s emphasis on investment in education and training, complemented by insistence on a social safety net, constituted a good fit with Taiwan’s efforts in industrial upgrading (Lin and Chou 2007: 108–109). However, the DPP controlled less than a third of seats in the legislature and thus needed votes from other parties to pass any legislation. Both major parties have been heavily factionalized, and party discipline has been low, which has made it difficult to implement any ambitious reform plans (Wong 2004: 124–125). Moreover, Taiwan suffered a recession in 2001. In spite of these constraints, the government launched the National Social Welfare Conference in 2002 and framed social justice and social welfare as an integral part of economic development (Lin and Chou 2007: 120). With support from grassroots coalitions, a new integrated Employment Insurance Program was launched, and the Gender Equality in Employment Act was passed (Peng and Wong 2008).

4 Emerging Issues and Cutting Edge Research

In both regions, gender issues have been put on the agenda in the past two decades. The economic crises and loss of male formal sector jobs forced more women to pursue paid employment. Increasing female participation in the labor market exposed continuing gender (p. 805) discrimination by employers and gender inequities in access to social security. Changing family structures, such as the decline of multi-generation households and the increase in female-headed households, raised the issue of care for children, the sick, and the elderly. Governments came under pressure from women’s movements and advocacy groups to address these problems, and most responded by establishing some kind of bureaucratic agency in charge of women’s issues. However, the concrete actions of these agencies varied widely, depending on the orientation of the incumbent governments and the strength of movements and advocacy coalitions with feminist or maternalist orientations.

In Latin America, women compose a disproportionate share of informal workers and, together with children, are overrepresented among the poor (Organización Internacional del Trabajo 2009). In this context, some important gender egalitarian provisions have been put in place since the 2000s. In the 2008 pension reform in Chile, women were compensated for the years in which they left the labor market to take care of a newborn. The 2005 pension reform in Argentina allowed workers to retire even if they had not finished their contribution years, a policy that particularly benefitted women who had had more interrupted and shorter histories of contribution to the system. In addition, the expansion of conditional cash transfer (CCT) programs, such as Bolsa Família and Chile Solidario, has improved women’s position through investment in school attendance and health check-ups. Nevertheless, that same conditionality of CCTs also tends to reinforce the role of women as caretakers (Soares and Silva 2010).

In East Asia, policy innovation after the 1997 crisis also came to include gender equity. The South Korean government established the Ministry of Gender Equality in 1999 and recruited many feminist leaders into these and other positions in the administration (Peng 2004: 415). In the same year, the government introduced a workfare program that included medical assistance, childcare, school fees, and counseling. Some 70 percent of the beneficiaries of this program were women (Peng 2004: 403). During the Roh Moohyun regime (2003–08), the Korean government further expanded its gender equity policies by implementing gender mainstreaming, expanding family-work reconciliation policies, and introducing the long-term care insurance program (Peng 2011). Taiwan lagged slightly behind in policy innovation, but it began to move in a gender egalitarian direction with legislation in 2001 on equal pay for equal work, and it progressed further in 2003 with a strengthening of women’s rights and expanded maternity and parental leave. In 2005 the government announced plans for developing home care services for the elderly and expanding childcare and family support (Peng and Wong 2008).

One of the key issues at the research frontier is the relationship between economic and social development. With somewhat overdrawn abstraction one could say that in Latin America many policy-makers have started to discover that social development is an essential ingredient for economic development rather than a diversion necessitated by political pressures, whereas in East Asia many policy-makers have discovered that social development has a value in its own right, not only as an instrument for economic development. There is little doubt that a healthy and well-educated population is essential for developing an economy that can be competitive in the international knowledge economy. What is in doubt is that high levels of economic development are a prerequisite for—and thus should take precedence over—a good educational system and good healthcare. James McGuire (2010) has demonstrated that this is not the case for healthcare; relatively low cost preventive and primary care measures can go a long way towards lowering premature mortality. (p. 806) The East Asian countries expanded primary and secondary education much faster than their Latin American counterparts at similar or higher levels of economic development, and this arguably contributed essentially not only to lower levels of inequality but also to the more rapid rise of these countries in the world economy.

An additional emerging issue is the uneven provision of welfare across the national territory. In large and highly decentralized countries, the social protection that individuals receive is designed and implemented at multiple levels: national, intermediate, and local. Brazilian and Argentinean states and municipalities, for instance, have designed an array of non-contributory social programs that interact, sometimes competing and sometimes complementing, with nationally designed social provisions (Niedzwiecki 2012). The characteristics of non-contributory transfers and services implemented throughout the territory, as well as party alliances and the capacity of the state to reach its population, are potential factors shaping these policies’ outcomes. A systematic empirical analysis of the factors that shape these subnational social policies and overall outcomes remains a much-needed endeavor.

Yet another key issue is the relationship between democracy and social policy. The Latin American experience before the 1980s suggested that democracy did favor expansion of social policy, but that it could well produce very fragmented and inegalitarian welfare states, based on formal-sector employment. Only Costa Rica had a relatively unified social security system complemented by non-contributory benefits for those outside the formal labor market. In East Asia, democracy was clearly associated with an expansion of social policy, but in both cases social policy initially focused on formal-sector workers, also. The patterns began to change in East Asia after the 1997 Asian crisis and after 2000 in Latin America, with a turn toward greater emphasis on the unemployed and those in the informal economy. This new direction took the form of expansion of unemployment insurance and training, non-contributory social assistance, and universal access to healthcare. The question is what produced this reorientation and whether it will last.

We would argue that the key dynamic is the strengthening of organizations, both parties and groups in civil society, that represent the interests of underprivileged groups, which was made possible under democracy. Such strengthening takes time, and indeed we find empirically that in Latin America it took some 20 years of democracy for a significant downward effect on inequality to occur (Huber and Stephens 2012). In Latin America the strengthening of left parties was crucial, and in East Asia, given the legacies of anti-leftism and the lack of class-based parties, it was the strengthening of advocacy groups in civil society that had the biggest impact. The expansion and reorientation of social policy in East Asia remains hampered by the weakness of the labor movement and left parties. In Korea, unions remain confined to the enterprise level (like in Chile), and the single member district electoral system greatly disadvantages new parties, including an emerging left party (Kang 2012; Yang 2012). Korean total public social expenditures in 2011 were still only 8 percent of GDP, less than half of those of Brazil and Uruguay, despite a GDP per capita of close to double that of Brazil.

We do have some preliminary evidence to suggest that this reorientation is likely to last, at least for the medium term. The resistance against partial privatization of the new healthcare system in Taiwan showed that people did not want to lose the benefits they had enjoyed. In Korea, welfare policy moved to the center of the campaign for the 2010 local elections and remained there for the 2012 presidential elections, with even the conservative (p. 807) party rhetorically embracing a universalistic project (Mah 2012). In Chile, the center-right candidate in the 2010 election promised not to roll back any of the social policy reforms his center-left predecessors had implemented, and he kept his promise. We do know from the experience of advanced industrial countries that universalistic programs, with entitlements as citizenship rights, are the most difficult to roll back. Yet, we also know that a shared perception of economic crisis or economic constraints can generate the political will to reduce such benefits. What remains to be seen is whether the universalistic, as opposed to fragmented, structure of social policy will prevail even under economically difficult circumstances.

Acknowledgment

The authors would like to thank Jeffrey Erbig, Peter Evans, Tulia Falleti, Matthew Lange, Stephan Leibfried, Ito Peng, and John Stephens for comments.

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