Welfare State Classification: The Development of Central Eastern European Welfare

Braun and Gilardi describe the mechanisms that drive policy diffusion processes. These mechanisms are defined as “a systematic set of statements that provide a plausible account of how two variables
are linked” (Hedstrom & Swedberg 1998 in Braun and Gilardi 2006: 299). The behavior of government B is influenced by government A (or organization X). A diffusion mechanism is thus a systematic set of statements that provide a plausible account of why the behavior of government A or organization X influences the behavior of government B. Braun and Gilardi distinguish six mechanisms, namely learning, competitive and cooperative interdependence, coercion, common
norms, taken-for-grantedness and symbolic imitation. However, most scholars argue that policy diffusion and thus policy change is driven by two mechanisms; Simmons and Elkins (2004) state that policy change is not only driven by country-specific factors, but also by international economic competition and learning (Simmons & Elkins 2004 in Braun and Gilardi 2006: 300). Hence, according to the literature policy diffusion is driven by certain mechanisms, of which learning and competitive
and cooperative interdependence are considered to be most important.
Learning means that the behavior of government A has an impact on government B because it conveys relevant information about policy choices. As a diffusion mechanism, learning is defined as the acquisition of new relevant information that permits the updating of beliefs about the effects of a new policy (Meseguer 2004, 2005 in Braun and Gilardi 2006). In other words, learning refers to the process of looking at experiences of others in order to change policies. In learning processes new information about the effectiveness of policies will lead to change as soon as the evidence points to a greater effectiveness for the alternative policy (Braun and Gilardi 2006: 307). Taking welfare states into account, one can state that if a certain country receives information about an increase in effectiveness of certain welfare policies, this country will change its welfare policy; convergence of welfare policy will take place. Competitive and cooperative interdependence is based on the
Prisoner’s dilemma; cooperation might lead to a beneficial situation for all parties, but a structural temptation to adopt policies that improve one’s own standing is always present. Competitive and cooperative interdependence means that the choice, or policy, of government A creates policy externalities that government B must take into account (Braun & Gilardi 2006). In other words, the latter mechanism means that the policy of government A has consequences for government B; government B needs to change and adapt its policy. An example given by Braun and Gilardi is the fact that if a country lowers corporate taxes in order to attract investment, other countries are stimulated to do the same (Braun and Gilardi 2006: 308). Cooperative interdependence can be considered to be more positive; benefits derive from having compatible polices; these policies are incentives to adapt for other policy makers. Accounting rules and commercial law are examples of cooperative interdependence (Braun and Gilardi 2006). The difference between this mechanism and learning has to do with the effectiveness of policies. In the case of learning a government only changes its policies when information about an increase in effectiveness is received while in the case of cooperative and competitive interdependence effectiveness is not the most important incentive of policy change; the externalities created by others are more important.
Most of the literature focuses on the influence of government A on government B. It does not take into account the influence of international organizations or supranational governments on the behavior and policies of governments. However, Fenger states that the development of Central
Eastern European welfare states in the direction of one of the well-known welfare types is likely to be reinforced by donor organizations like the IMF and the World Bank (Fenger 2007: 4). In other words, Fenger argues that these donor organizations influence the choices made by governments of former communist countries. Even though the literature does not pay much attention to the influence of NGOs and IGOs, Braun and Gilardi distinguish a mechanism which refers to this influence; they describe the imposition of policies on national governments by powerful organizations of powerful countries as coercion. They do admit that coercion technically is not a diffusion mechanism because it emphasizes top-down pressures rather than on horizontal interdependencies (Braun & Gilardi 2006: 309). Like Fenger they argue that, besides the European
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Union, also international organizations as the IMF and the World Bank have the power to promote policy change, notably by making certain reforms as a condition for loans. Thus coercion is a process where powerful actors use carrots and sticks to impose policy change on certain countries. For example, the IMF has included privatization as a standard condition of its structural adjustment lending (Braun & Gilardi 2006: 310). Concluding, one can state that the mechanism of coercion can be used in order to achieve policy diffusion. This mechanism is relevant to this study; CEE countries often apply for IMF loans, and also the European Union tends to influence the policy of CEE countries. When looking at the organization of the CEE welfare states, the emphasize on privatization is interesting. Taking this emphasize into account, one can argue that the CEE welfare states which apply for an IMF loan will move towards a welfare state that fits into Esping-Andersen’s classification scheme. More precisely, one can state that these countries move towards a welfare regime which can be considered to fit into the liberal welfare classification. Next paragraph will address Esping-
Andersen’s welfare classification scheme firmly; characteristics of the liberal welfare regime will be reviewed.
All in all, the policy diffusion perspective as described above can be used in order to review the development of Central-Eastern European welfare states in terms of Esping-Andersen’s welfare state classification. The three policy diffusion mechanisms - learning, competitive and cooperative interdependence, and coercion - addressed in this paragraph will, according to this perspective, influence the policy and thus the organization of welfare regimes of CEE countries. Again, taking this perspective into account, one can state that due to policy diffusion CEE welfare states will, after a period of transition, fit into Esping-Andersen’s welfare classification. The transfer of ideas, knowledge, information and other resources through one of the described mechanisms will result in the development of CEE welfare states in the direction of one of Esping-Andersen’s welfare regimes.

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