Social policy as a development tool?

Abstract

"Is social policy a necessary ingredient of economic growth and development or its possibly dysfunctional by-product? This is a grand question that does not permit a definitive answer. There are many strands of literature in economics and other social sciences that let one approach this question. In this paper, I try to use economic theory and the empirical experiences of one Nordic economy to suggest some positive linkages between social policy and economic development. In particular, I will discuss the role of social policies in alleviating the negative effects of risks and uncertainty as well as of distributional conflicts -- both inevitably associated with economic growth and development. I shall outline a couple of economic arguments and show that they can at least shed some light on the experience of such countries as Finland, characterised by small size, corporatist political and economic structures and lateness as to industrialisation and economic development. Whether these lessons on national growth and innovation systems are of any interest for those countries that try to find their niches in the globalised economy of the 2nd millennium is another question."(pg 1)