• Tom Conley

03 December 2009As the financial crisis has made clear, globalisation does not mean the end for the state, writes Tom Conley

ONE OF THE MAJOR arguments of economic liberals in the 1990s was that globalisation would force a reduction in the size of the state. I was always sceptical about such claims given that the evidence seemed to go in the opposite direction when considering the fact that small trade exposed developed economies often had high taxation and extensive welfare states.

The latest OECD figures show that tax revenue declined (very) slightly in 2008 but this is not surprising given the economic downturn. Over the previous 30 years or so, as the world has become more globalised, tax revenue as a percentage of GDP has increased.

The figures for 2007 and 2008 make interesting reading showing that Australia is generally a low tax economy...

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