Viability of Social-Democratic Development: Analysis of World's Input-Output Matrices 2010

• In Event: 3447 - New Directions in the Political Economy of Development

Abstract

This paper argues for the existence of social democratic development – development that occurs as a direct result of the amelioration of the income of poor people. Social democratic development can occur through many causal mechanisms, such as land reform, or by providing education or microcredit to poor people. This paper emphasizes a different mechanism of social democratic development – increasing the multiplier effect in societies. The poor are more likely to consume than the rich. Increasing household income increases the multiplier effect producing growth. The size of multipliers is estimated using the population of Leontief input-output matrices that are available for 2010. Amazingly, even though hundreds of Leontief matrices have been calculated to estimate multiplier effects in the Global North and the Global South, the findings of those matrices have never been reported. The analysis finds that Leontief multipliers for households are at least as great as those of manufacture, the traditional focus of development plans. Government, education and health also have multipliers as large as manufacture. The analysis suggests that plans to shrink government and reduce expenditure in health and education can have immediate adverse short-term effects on economic growth by eliminating the substantial multiplier spending associated with each of these sectors.

Authors

• Samuel Cohn, Texas A&M University

• Lexie Ford

• Bryson Thomas Bassett, Texas A&M university

• Anna Kimmery, Texas A&M University Sociology