26 Sep 2006

Globalisation and Social Risk Management in Europe

A Literature Review

Juraj Draxler

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European Network of Economic Policy Research Institutes (ENEPRI) Research Report No. 23 / 47 pages

Globalisation has become a catch-all term imbuing public discussions with a sense of urgency about something that often cannot even be properly identified. This literature review presents an outline of arguments about what globalisation actually can mean, how to measure it and how to face it.

Large parts of the world have seen an explosion in trade, cross-border investment flows and innovation transfers in recent years. Quantitatively, this can be captured in the appropriate statistics. On the other hand, in trying to understand the drivers of these changes, it is necessary to describe the changing institutions and actors that play a significant role in this process. Some authors point to the role of the multinational enterprise as a uniquely defining feature of globalisation.
It is difficult to disentangle the effect of globalisation from the evolution of the most-developed economies towards a ‘post-industrial’ mode of operation. On top of this, countries are increasingly affected by endogenous social changes such as the diminished role of the nuclear family and population ageing (resulting from falling birth rates and rising longevity).

Policy-makers face demands to help citizens cope with the risks arising out of this new state of affairs. In addition to describing globalisation, this paper provides an overview of the possible responses. In particular, it focuses on the growing body of literature that seeks to re-focus the attention on social protection as a ‘productive factor’ and as something that should be seen as part of the larger framework of ‘social risk management’. The latter concept stresses the need to look at social protection as only one component of a larger framework, which contains macroeconomic conditions as well as various state, market and individual tools for managing personal risks.