Divergent Trajectories: Healthcare Insurance Reforms in East Asia ...

Illan Nam, Colgate University, Feb 2011Draft in progress, please do not quote or citefollowing decade. Finally, in South Korea, while trade did not change meaningfullybetween the two decades, averaging around 66% of GDP in both decades, the level ofFDI/GDP increased from below 2% in 1990 to around 12% by 2000, while portfolioinvestment rose more significantly from 1% in 1990 to 23%. In Chile, the level ofFDI/GDP increased from 30% in 1990 to 61% in 2000 while portfolio investments rosefrom around 8% to 13%. 18LITERATURE REVIEWTo explain the divergent outcomes of healthcare insurance reform in South Koreaand Chile, my argument emphasizes the degree of solidarity between the formal andinformal sectors as well as the different incentives that electoral competition in weaklyinstitutionalized and regionalized party systems generated versus more robustlyinstitutionalized and nationalized party systems. This argument builds upon and extendsseveral important schools of thought within the welfare state literature. I briefly reviewthese major contributions, evaluating both their shortcomings in explaining the puzzle Iexplore in this project as well as the ways in which they informed my own argument.The globalization argumentOne of the most vigorous debates in the welfare state literature centers on thecapacity of governments to sustain welfare spending in the face of increased integrationin the markets for goods, capital, and services. The conventional wisdom aboutglobalization was that the competitive pressures brought about by increased trade ingoods and services and greater openness to capital flows would make it more difficult forstates to provide social welfare. Because these programs are financed by taxes on capital18 International Financial Statistics and Government Financial Statistics, various years (IMF)15