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Can Social Protection Be an Engine for Inclusive Growth?

image of Can Social Protection Be an Engine for Inclusive Growth?

The potential role of social protection in the development process has received heightened recognition in recent years, yet making a strong investment case for social protection remains particularly challenging in many emerging and developing countries. This report challenges us to think deeply about the economic rationale for social protection investments through an inclusive development lens. It helps us understand the links between social protection, growth and inequality; how to measure those links empirically; social protection’s impact on inclusive growth; and how to build a more solid economic case for greater social protection investments.

The report adds to the debate on social protection in three ways. First, it proposes a methodological framework to conceptualise and measure the impact of social protection on what the OECD defines as inclusive growth. Second, it provides new empirical evidence on the impact of different social protection programmes on inclusive growth. Third, it helps strengthen the case for greater investments in social protection while also calling for better data to measure impacts.

English

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Assessment and recommendations

Recent years have seen a heightened recognition of the potential role of social protection in the development process. Social protection now constitutes an essential component of the global agenda for sustainable development and it occupies a large place in several regional and national commitments. To a large extent, this infatuation for social protection has been fuelled by the recognition of social protection as a human right under international human rights law, as well as overwhelming evidence that investing in social protection is crucial for tackling poverty and vulnerability, and for improving job quality. Making a strong investment case for social protection during budget discussions can remain a difficult task, however. Not only the economic impact of social protection investments, beyond cash transfers, remains insufficiently documented empirically, but contrasting views still exist about the contribution of social protection to growth and equity. Some, and there are many, might see social protection investments as drivers of overall economic growth and inequality reduction. Others, in contrast, might emphasis the possible adverse effects of social protection on growth through tax distortions and changes in labour allocation and precautionary savings. Clearly, this shows the need to better document empirically the economic impact of social protection programmes and to build a more solid economic case for investing in such programmes.

English

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