Is globalisation forcing governments to intervene more?
We seek to determine whether countries whose economies are very open (from a real or financial viewpoint) have governments that intervene more in the economy (higher government spending, especially on social welfare; lower taxation of capital income and corporate profits; larger redistributive policies); The idea is that in a highly globalised economy: There are losers from globalisation (due to competition via labour costs and manufacturing job losses), which requires more social welfare and more government spending to support these losers from globalisation and more redistributive policies to correct the rise in inequalit y caused by globalisation; Globalisation leads to strong competition to attract capital (financial and corporate), leading to a reduction in taxes on capital income and in corporate profits. But we can see a single significant effect: low taxes on earnings when financial openness is substantial .