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What’s Social Policy Got to Do with Economic Growth?
Ravi Kanbur
What has social policy to do with economic growth? Quite a lot, it would appear, if one takes the results of cross-country growth regressions at face value, as is done by many social policy analysts, even as they criticize the findings of the economic policy part of the very same regressions. I argue that these regressions are deeply problematic, and are antithetical to the normal instincts of social policy analysts regarding the importance of country and community specificity. At the same time, attempts to distinguish social policy from economic policy in terms of policy objectives is not very successful, whereas classifying policy instruments into economic or social instruments also leaves a significant grey area. However, literature on the analysis of economic and social policies can indeed be distinguished in their approaches to understanding the mechanisms of policy transmission. Despite the difficulties of defining social policy analysis, except in contradistinction to economic policy analysis, both kinds of analyses are needed to advance the understanding of the impact and design of the policy. The World Bank should: (i) play a leading role in developing and assessing such multidisciplinary approaches, (ii) move to a much more outcomes-based system of aid allocation in recognition of the country-specific complexities of linkage between (economic or social) policy and outcomes, and (iii) understand itself better as an institution, and its institutional footprint in countries where it is a big player.

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