8.3A The Relationship Between Economic and Social Progress

The relationship between economic and social progress is complex and dependent on decisions made by governments on the importance of social progress; this ranges from welfare state with high levels of social spending to totalitarian regimes run by elites with low levels of spending on health and education. 

The relationship between economic and social progress is complex, however at the 2016 G20 summit in Hanzhou all 20 leaders agreed that global economic growth would lead to improved conditions for all people.  

​Social progress is the idea that societies can improve over time in economic, human and environmental terms. Governments play a key role in this, as their decisions can prioritise:
  • Economic development, through infrastructure spending, e.g. roads, railways, power grids and tax breaks to attract foreign visitors
  • Human development through spending on education, healthcare and benefits for disadvantaged groups, and promoting freedom and equality. 
    • E.g. France spends 11.5% of GDP on health, or 2.8% in Bangladesh. 
  • Environmental wellbeing, by reducing pollution (and its negative health effects), ensuring clean water and sanitation, and protecting ecosystems and species. 

Most governments do all of these thing, but not equally. The Social Progress Index (SPI) attempts to quantify how well governments provide for their people. It is based on three factors:
  1. ​basic human needs -> nutrition, medical care, shelter, water, sanitation and safety
  2. foundations of wellbeing -> education, access to internet and mobile phones, life expectancy, pollution levels
  3. opportunity -> personal rights, political freedom, gender equality, tolerance of immigrants and access to advanced education. 

Ethiopia
  1. 52
  2. 54
  3. 29
Income per person: $870
Health spending: $24 per person/year
Education spending: 4.5%
Very low income country, with low levels of spending on education and health. Very low SPI opportunity scores. An authoritarian regime. 

Russia
  1. 79 (basic human needs)
  2. 72 (foundations of wellbeing)
  3. 50 (opportunity)
Moderate to low SPI scores. Health spending ($524) around half of Costa Rica's and education 4.1% of GDP. An authoritarian regime. 

Costa Rica
  1. 88
  2. 85
  3. 71
No armed forces. Government spends large sums on both health ($929 per year) and education (6.3%). SPI scores much higher than Russia, despite similar income. A functioning democracy. 

Sweden
  1. 95
  2. 90
  3. 83
Income per person: $53,200
Health spending: $5.600 per person/year
​Education spending: 7%
A government with a strong commitment to welfare state spending, with high levels of both health and education provision provided by the government. An advanced democracy. 

It is noticeable that:
  • ​the democratic countries of Sweden and Costa Rica spend large sums, in relation to income per capita, on health and education, and this leads to high SPI scores because of the impact of a welfare state. 
  • authoritarian/totalitarian (people cannot choose leaders, so can't influence or criticise policy) Russia and Ethipia are run by elites, who provide far less to their people and hence SPI scores are low. 


Alternative examples - France vs Saudi Arabia - more detail, but without the link to economic progress

France

France has one of the highest levels of government spending as a percentage of GDP in the G20 - 56.1%
Health
  • Healthcare is predominantly state funded
  • 4th highest spending as a % of GDP in the G20
  • However, French residents pay top up insurance of about £150 per family per month
    • (but the largest proportion of the health budget is state funded)
Welfare and pensions
  •   High welfare and pensions payments
  • In 2016, someone who had worked full time for 40 years would receive twice the 2018 UK State pension (£15000 and £7500)
Education
  • High spending
  • 2015: £8500 per student per year
  • UK: £7000 in London and £3750 in rural areas  


Saudi Arabia

The most autocratic power in the G20, where the ruling family assumes absolute authority. 97% of export earnings come from oil production, and this is largely owned by the royal elite, which control the Saudi economy and, to some extent, the oil price. However, this means that when oil prices fall the economy becomes debt-ridden. The decisions of the royal family control the country. 
Health
  • 80% state funded
  • High quality hospitals
  • Free state healthcare
Welfare and pensions
  • In 2015, 1/3 of working-age Saudis were in work (though the official unemployment rate was 12%, because it doesn't count women)
  • Only 22% of women work
  • In 2013, Time magazine claimed that 20% of the Saudi population lived in poverty
  • Unemployment pay is £400 a month, payable for 12 months
  • Pensions are £300 a month, low by global standards (but half of the workforce is from overseas, and most return)
Education
  • Education focuses on religious teaching
  • Scientific and technical education are weak
  • Rote learning dominates
  • Saudi teachers are poorly trained, and leaver are often unable to find jobs in technical and oil industries, or in government departments.