World Bank Pension Reforms and Development Patterns in the World System and in “Wider Europe”. A 109-Country Investigation Based on 33 Indicators of Economic Growth, and Human, Social and Ecological Well-Being, and a European Regional Case Study
This article compares the cross national effects of pension reform on 33 indicators of social, economic, political and ecological well-being of nations with the effects on these 33 variables by dependency, the adherence to the advice by international financial institutions, world political or world cultural identities; the aging process; feminism, militarism; the public education effort and the develop-ment level.
It is true that the ascending countries of East Asia, whose in-vestment is often much higher than their savings rate, are at the winning side in the global social equation. It is also true that unequal exchange (ERDI) is still an important phenomenon, significantly explaining many processes of development. However, the privatization of public education, especially at the Third level, the developmental negative consequences of female distribution coali-tions as well as the imperative of pension reform have been up to now neglected in cross-national development research. Interestingly enough, “economic freedom” as such is also not as relevant as pension reform in explaining economic or social success in the world system. We can say that foreign savings and pension reforms are among the most highly influential positive determinants of de-velopment today, while culturalist theories and dependency theo-ries fail to achieve the levels of significance we had originally ex-pected when compared to the new cross-national variable “pension reform”.
These findings have important repercussions for the Euro-pean debate on pension reform and the Lisbon strategy to catch up with the United States by 2010 to make Europe the most competitive region in the world economy.
European Union membership years by themselves are lamenta-bly enough a rather negative determinant of the processes of development due to the cumbersome mechanisms and distribution coalitions that European institutions present, and the reliance of many countries in the European Union on publicly financed systems of education also has to be re-considered.
To neglect pension funds in investigations about the capitalist world economy would be misleading at any rate. Private pension funds already amount to 44% of current world GDP, with countries like the United States; Japan; United Kingdom; taking the lead in fund development either via the introduction of a “World Bank” three-pillar models or simply via a strong element of private pensions.
Our investigations also clearly show that World Bank pension reforms are associated in a positive way with the rates of change of a country’s performance to the better. The time-series correlations for each country in the world system from 1980 onwards with eco-nomic growth (World Bank data series), unemployment (ILO data series), and economic inequality (University of Texas Inequality Project) are neatly explained by our explanatory variables; the di-rection of the influence of pension reform on the three dependent variables each time indicating that pension reform is compatible with economic growth, full employment and the redistribution of incomes.
The same positive effects are also at work in explaining eco-nomic growth, full employment and reductions of unemployment over time in Europe’s over 300 different regions. The European regions, whose countries realized a three-pillar pension model, de-veloped more rapidly and had – ceteris paribus – a better employ-ment record than the non-reformers. Persistent non-reform, as the German example especially dramatically shows, can lead to a cir-culus viciosus of stagnation and unemployment under the condi-tions of globalization.