Welfare Regimes in Asia: Convergent or Divergent?

The study of welfare state trajectories has primarily focused on advanced economies, overlooking the Asia-Pacific region's dynamic economic growth. While Esping-Andersen's classification of welfare states includes Japan, it implicitly categorizes East Asian welfare systems as exceptional, suggesting divergence from typical welfare framework development. This study challenges this assumption, proposing that Asian countries are adopting a balanced approach between commodification and decommodification, contradicting CPE and IPE theories. CPE suggests systematic divergence, while IPE implies convergence towards market-driven commodification. The Asia-Pacific region faces challenges such as escalating productivity competition, external economic shocks, and growing internal inequality, demanding a nuanced analysis of its evolving welfare states. The study examines 20 Asia-Pacific nations, highlighting their incorporation into the international economic system and their role in the global supply chain, focusing on the transformation of their welfare regimes since the 2000s.

The literature on welfare state development encompasses structuralist, rationalist, and culturalist perspectives. Structuralists emphasize macro-level processes like state-building and industrialization, while rationalists focus on strategic interactions among societal actors. Culturalists highlight the role of societal values and norms. Esping-Andersen's influential framework identifies decommodification as a key variable characterizing welfare regimes in advanced economies, but its limited geographical scope restricts its applicability to Asia. CPE literature suggests that economically developed nations converge towards similar welfare systems, while less-developed nations exhibit heterogeneity. The role of democratic institutions is also debated, with some arguing that authoritarian regimes expand welfare policies to ensure political stability and economic development. IPE suggests that global economic integration pressures countries towards neoliberal policies emphasizing commodification to attract capital and promote exports. This leads to reduced social spending and a shift away from decommodification. The study acknowledges the limitations of both CPE and IPE frameworks in capturing the complexities of welfare regimes in the Asia-Pacific region.

This study employs a data-driven approach using principal component analysis (PCA) and clustering algorithms to classify welfare regime types in 20 Asian countries and analyze their changes from the 2000s to the 2010s. The four-step empirical analysis involves: (1) dimensionality reduction using PCA to extract implicit characteristics of variables and reduce noise from high inter-variable correlations; (2) clustering using K-means++, hierarchical clustering (Ward linkage method), and DBSCAN to group countries based on commodification and decommodification features; (3) classifying countries into clusters based on clustering results; and (4) analyzing the evolution of clusters over the two decades. Commodification variables include public spending on education and healthcare, literacy rates, life expectancy, immunization rates, and a gender equality measure. Decommodification variables encompass social insurance mechanisms (pensions, healthcare, unemployment insurance), social assistance, and the number of ILO conventions ratified. Data are sourced from the World Bank, Asian Development Bank, UNDP, and other international organizations. The Silhouette Score is used to determine the optimal number of clusters for K-means++. PCA decomposes the covariance matrix of data into eigenvectors and eigenvalues, linearly transforming the data via the eigenvectors. K-means++ improves upon K-means by carefully selecting initial centroids. Hierarchical clustering builds hierarchies from the bottom up, while DBSCAN clusters data points within a specific epsilon radius.

PCA results show that PC1 in both commodification and decommodification analyses accounts for a substantial portion (over 77%) of the data variance, indicating that these dimensions capture the essential characteristics of welfare regimes. In the 2000s, K-means++ clustering reveals five optimal clusters, with Cluster 0 resembling a protective welfare regime. In the 2010s, the optimal number of clusters reduces to three, with Cluster 1 mirroring Cluster 0 from the 2000s. This reduction in clusters suggests a consolidation and convergence towards more balanced welfare regimes. The clustering results show that countries are not strictly grouped by their political regime type. The findings reveal that Asian nations have not exhibited significant convergence towards commodification or divergence into highly heterogeneous patterns, defying both CPE and IPE expectations. Countries maintain a balanced approach to commodification and decommodification across various political systems, suggesting that shared challenges rather than similar political structures drive similarities in welfare policies. Hierarchical clustering and DBSCAN analyses support this finding, indicating fewer clusters in the 2010s and stronger connections between clusters, suggesting a movement towards a dynamic equilibrium.

The findings challenge existing theoretical frameworks by demonstrating that Asian nations neither strictly converge towards commodification nor diverge into highly heterogeneous welfare regimes. The observed dynamic equilibrium between commodification and decommodification highlights the adaptive capacity of Asian welfare states. The reduction in the number of clusters over time, irrespective of political systems, points to a common response to global economic integration and internal pressures. The balance between commodification and decommodification allows Asian countries to respond effectively to both global economic pressures and domestic social needs. This suggests a more nuanced understanding of welfare regime development, moving beyond simplistic convergence or divergence models. This equilibrium represents not a static state but an adaptive response, showcasing flexibility in navigating conflicting demands of global integration and domestic social imperatives.

This study provides a nuanced analysis of welfare regime development in the Asia-Pacific region, challenging conventional theories and highlighting a dynamic equilibrium between commodification and decommodification. The findings suggest that Asian countries' welfare systems are not strictly determined by political systems or solely shaped by global pressures. Future research could focus on exploring the specific mechanisms driving this equilibrium, investigating the role of institutions and historical legacies in shaping welfare outcomes, and examining the impact of this balanced approach on social and economic well-being.

The study acknowledges data limitations, particularly regarding the availability of comprehensive and consistent data on welfare regimes across diverse Asian countries. The reliance on data from various international organizations introduces potential inconsistencies and biases. The choice of clustering algorithms and the determination of optimal cluster numbers are also acknowledged as methodological limitations. The study's assumption of a positive association between inequality and welfare budget expansion is also subject to debate, as some literature challenges this link. Furthermore, the study does not fully explain the individual country trajectories within the observed trends, especially notable outliers like Japan and Afghanistan.