Viability of Social Democratic Development: Evidence From Leontieff Input-Output Matrices

• In Event: 1453 - Regular Session on Development

Abstract

This paper is a report of preliminary findings on the viability of social democratic development in the Global North and the Global South. Social democratic development is economic development in the form of increased employment or GDP that come from providing income, higher wages or class power to poor people. We review the mechanisms of social democratic development that exist in the sociological literature. We then test one mechanism – Keynesian multiplier based development in which increasing wages and household income creates spinoff development from increased consumption and purchase of consumer goods and services. This is one form of a multiplier effect. We are in the process of collecting the complete population of Leontieff input-output matrices that measure the multiplier effects for both rich and poor economies. Early results from a preliminary subpopulation of countries show strong support for the viability of social democratic development. Multipliers from both wages and from household income are large. They are particularly large in rich countries – where wages are high – and in government employment – where wages are also high. Wage and household multipliers are generally of a comparable magnitude to the multipliers associated with the purchase of industrial supplies – the traditional “backward” linkage considered in development economics. The implications of these findings for current social debates on the proper size of the state are discussed.

Authors

• Samuel Cohn, Texas A&M University

• Lexie Ford, Texas A&M University

• Bryson Bassett, Texas A&M University