Culture, Closeness, or Commerce? Policy Diffusion and Social Spending Dynamics

In a globalized world where trans- and supranational networks, communication and the exchange of information gain in importance, national political decision making processes do not occur independently from each other. Policy diffusion is assumed to become more and more relevant also for welfare state development. This paper explicitly focuses on the policy diffusion among 21 OECD countries in the period between 1980 and 2007 looking at social spending dynamics. The empirical findings of the spatial regressions clearly indicate that spatial patterns in social spending dynamics are driven by policy diffusion processes. In fact, economic interdependencies define the pathways of diffusion. Trading partners move in the same direction regarding social policy behavior. Surprisingly, cultural and geographical proximity are less relevant for the diffusion processes, at least in terms of social spending dynamics.