Why did Latin America and East Asia develop such different social policy regimes? New research shows that the answer lies not only in domestic conditions, but also in countries’ position within the international economic and geopolitical order.

Studies on social policy development in the Global South have become more popular in recent decades. This has helped to fill the geographical gap left by studies of social policy in OECD countries. Although social policy in the Global South dates back to the colonial period (see, for example, Schmitt et al. 2015), the pillars of these social policy regimes were largely established during the twentieth century, especially in the postwar period.

However, existing studies usually limit themselves to describing the development of these social policies, without seeking to explain the origin of their diversity. In our research article International complementarities of social policy development: How trade flows influenced early welfare state formation, published online first in the international peer-reviewed journal Global Social Policy (Cortina-Escudero, Berens & Manow 2026), we ask why different regions of the Global South have developed different types of social policy.

One strand of the literature links social policy regimes to broader modernization strategies associated with industrialization (Wibbels & Ahlquist, 2011; Haggard & Kaufman, 2008).

From Industrialization to Different Welfare Regimes

Latin American countries developed an import-substitution industrialization (ISI) model, in which the industrial sector was protected from international competition and produced primarily for the domestic market. This model fostered an urban coalition between formal labor and industrial capital, leading to a social protection regime based on contributory social insurance schemes for the formally employed. As a result, a large share of informal sector workers was excluded, while benefits were concentrated among a relatively small group of labor market insiders.

In contrast, East Asian countries developed an export-led industrialization (ELI) model aimed at reducing production costs to enhance the competitiveness of exports in global markets. Consistent with this strategy, social spending remained relatively low and coverage uneven. Welfare provision relied heavily on company-based benefits, while governments prioritized basic public health services and the expansion of education to improve human capital and support industrial upgrading.

But why did these two different models emerge in different regions of the Global South? Wibbels and Ahlquist (2011) argue that countries' factor endowments (labor, capital, and land) explain the choice of modernization strategy. We find this explanation to be, at best, incomplete. Instead, we argue that countries' embeddedness in the international order (both economically and geopolitically) – or in different terms, the international division of labor, – influenced their choice of modernization strategy.

How the International Order Shaped Development Strategies

We first argue that the rise of the United States (US) during the interwar years as the international hegemon promoted industrialization in both regions. Unlike the previous hegemon, Britain, the United States was a major producer of both manufactured and primary goods, particularly agricultural products, as well as natural resources such as minerals and oil. This altered the existing international division of labor: peripheral countries that had previously specialized in the production of primary commodities experienced declining returns from these exports and increasingly shifted toward industrial production. Furthermore, the emergence of the United States as a global industrial powerhouse was accompanied by the rise of multinational corporations in manufacturing sectors such as automobiles, metallurgy, petroleum, and electrical appliances.

In this context, the United States sought to expand its industrial presence abroad through multinational corporations and foreign direct investment (FDI). Whereas Britain had primarily specialized in producing relatively simple manufactured goods within its own territory, the United States increasingly focused on the production of more technologically complex goods, including capital goods, which were exported to industrializing countries in Latin America and East Asia.

If the transition from the British to the US system fostered the industrialization of both Latin America and East Asia, why did these regions pursue different development strategies, with Latin American countries adopting ISI, and East Asian countries following an ELI strategy? We suggest, differing degrees of military conflict led to the development of distinct state bureaucracies, which, in turn, followed different development strategies.

Why East Asia and Latin America Took Different Paths

In the case of East Asia, countries have experienced constant military conflict since the late nineteenth century. The imperial ambitions of Japan and, later, the competition among China, Russia, and the United States during the Cold War, the Korean War, and tensions between Communist China and Taiwan generated high levels of geopolitical conflict. In this context, strong state bureaucracies emerged in East Asia to pursue state modernization and military consolidation. As a result, state bureaucracies in East Asia were strong enough to pursue an ELI strategy, as it could effectively subordinate the interests of labor and business to the long-term development of a competitive industrial economy.

In the case of Latin America, countries did not experience military conflict after their very early independence in the first quarter of the nineteenth century. In this context, state bureaucracies with autonomy from socioeconomic groups such as landowners, businesses, and organized labor did not emerge in Latin America. As a result, the state bureaucracy lacked the strength to pursue an ELI strategy, as it could not effectively subordinate labor and business to its control. Instead, ISI aligned with the immediate interests of these social actors.

In our article, we provide a historical analysis, descriptive statistics, and a series of regression models to find support for our argument. We further contribute to the methodological discussion on the operationalization of Wibbels and Ahlquist's (2011) argument. Overall, our article aims to show that national drivers of social policy should be understood within a broader international perspective. Especially given current developments of geopolitical alignments, such as massive shifts in global trade agreements initiated with the United States’ turn towards protectionism and hence intense restructuring of global supply chains or China’s Belt and Road Initiative announced in 2013, international complementarities may continue to shape welfare state development in both the Global North and South.

References

Cortina-Escudero, M., Berens, S. & Manow, P. (2026). International complementarities of social policy development: How trade flows influenced early welfare state formation, Global Social Policy (online first). DOI: https://doi.org/10.1177/14680181261458146

Haggard, S., & Kaufman, R. R. (2008). Development, democracy, and welfare states: Latin America, East Asia, and eastern Europe. Princeton University Press.

Schmitt C, Lierse H, Obinger H, et al. (2015). The global emergence of social protection: Explaining social security legislation 1820–2013. Politics & Society 43(4): 503–524.

Wibbels, E., & Ahlquist, J. S. (2011). Development, trade, and social insurance. International Studies Quarterly, 55(1): 125-149.