Download Citation on ResearchGate | The Relationship between Economic Development and Social Welfare: A New Adjusted GDP Measure. Economic growth is an increase in the productive capacity of the economy and also an increase in real national income. But economic welfare is a more rounded measure of progress in improving people's lives taking into Social Welfare. Relationship between economic growth and social welfare in sustainable development - major solutions for Vietnam. 24/4/ ' Send Print. Relationship.
To illustrate the relationship between progress, social fairness, and economic growth, this article looks only at major social issues such as population, job generation, unemployment, inequality, and social welfare. A time will come when the natural resources are depleted, income is insufficient for any further technological reform, and workers are dissatisfied with their low incomes but lack any opportunity to train in the use of new technology and avoid unemployment.
Such phenomena become obstacles to any follow-up development process. Sustainable development requires vertical growth, based on increased productivity of labor through improved qualification of workers, application of advanced science and technology, organization and production management reforms, and more efficient use of materials and natural resources combined with environmental protection.Indicators of Economic Development
Economic growth has a double-sided impact on society. On one hand, it transforms the structure of economic sectors, forms many new sectors, and creates jobs. On the other hand, the application of advanced technology and increased demand for a highly-skilled workforce leads to a redundancy of unskilled labor, an increase in unemployment, and a shortage of skilled labor if education and training fail to meet requirements.
Economic growth with a market mechanism with fierce competition serves to accelerate production and leads to a widening disparity between the winners, who earn higher incomes and become better off, and the losers, who become poorer, even bankrupt, creating a huge income gap in the population and forcing the State to regulate income in order to ease social inequality.
There is an erroneous perception that social policies will siphon off resources and reduce production-centered investment, hampering economic growth. In fact, the contrary is true: Humans are both the creative subject and object served by production. Social policies supporting education, health care, insurance, and so on, which help people increase knowledge, maintain health, and lead a secure life, also boost creativity, labor productivity, and economic growth.
A policy of raising incomes not only improves the living standards of the most vulnerable, but also stimulates demand and liquidity, strengthening production.
The main points are these: First, in removing obstacles to the planned economic mechanism and production development in the earliest stage of the market economy, the goal is to liberate production forces, but too much attention to GDP growth and disregard of social issues hamper the beneficiaries of such GDP growth.
Analyzing the Relationship Between Economic Growth and Social Welfare in Hong Kong
A low income level for the majority of the public weakens domestic demand in the long run, negatively affecting the comprehensive development of the labor force. Social development is the most important condition for economic growth and it is necessary to shift from preferring economic development over social development to harmonizing economic and social development.
Second, in the context of dominating poverty and egalitarianism, it may be necessary to boost those people and regions with the greatest potential first. But when a market economy develops, various interest groups benefit from the development to various degrees. When economic growth is achieved through the uneven progress of different social groups, the population will inevitably be divided into groups of greater power and groups of losers.
Although advantaged groups within the population may be small, their benefits are disproportionately greater.
They have power in hand and own valuable resources. These powerful groups not only can protect their own interests easily, but can also increase their influence on decision making.
The wealth disparity continues to widen, leaving the losers in despair and weakening the foundations of social stability. Clearly, it is essential for the State to set a goal of greater equality and greater fairness. Third, when the private and mixed economic sectors expand and the state-owned sector shrinks, the gap between the rich and the poor widens.
The income disparity between urban and rural populations grows. The government should use redistribution as a leverage tool to regulate incomes and narrow this income gap.
Fourth, economic renewal initially begins in rural areas because the rural areas have land and labor. Later on, farmers become disadvantaged when their land rights are constantly violated. For a long time farmers in Vietnam have had limited access to public services. Now an institutional shift toward rural areas is needed to narrow the gap between rural and urban areas and ensure social harmony.
Fifth, rapid economic growth accompanied by a degrading of culture, politics, and society slows the progress of economic reforms. A degradation of social ethics, a lack of trust, and a poor social welfare system pose grave hindrances to development. In short, to achieve sustainable development it is crucial to combine economic growth with social progress and fairness. Major approaches to combining economic growth with the implementation of social policies in Vietnam Documents of the 11th Congress of the Communist Party of Vietnam say human beings are the center of the development strategy and the subject of development.
The 11th Congress of the Communist Party of Vietnam set out a policy of comprehensive development of culture and society in harmony with economic growth. It is necessary to complete the policy system, closely combine economic policy targets and social policy targets, and exercise social progress and equality in every development policy that matches specific conditions to ensure rapid and sustainable development.
The Socio-Economic Development Strategy identifies as one of three breakthroughs the rapid development of human resources, particularly highly-skilled human resources, through a concentration on radical and comprehensive education reform and the coordination of human resources training with the development and application of science and technology. Inthere were only students per 10, people in Vietnam. This is relative to aggregate social welfare spending as percentage of GDP.
The Organization for Economic Cooperation and Development OECD cements the concept of welfare in the fundamental principle of promoting and protecting both economic and social well-being of its citizens. Within this framework, economic policy and social policy play complementary roles. One seeks to impact and benefit the other. Kwok echoes these concepts espoused by the OECD, explaining that in an ideal welfare state, government pursues the protection and promotion of the social and economic well-being of its citizens through equal opportunities, equitable distribution of wealth, and a conscious public responsibility to support and provide enabling mechanisms for those unable to live a good life.
The welfare state model illustrates how economic policy tends to be receptive and responsive to social issues, thus being more open to influence by social policy. Reflecting on the relationship between economic growth and social welfare in Vietnam, Do offers insights applicable to Hong Kong.
Do defines economic growth as a primary factor and material condition for social problems; when the economy is improving, correspondingly, social conditions improve. But while economic growth is the most popular gauge of development, it alone cannot be the ultimate measure or the single litmus test for development. Do argues that economic growth is a necessary condition, a core driving force; but apart from an analysis against growth rates, development has to be gleaned from the quality, social targets and beneficiaries of economic growth rates.
Is it economic policy that dictates social policy? Or is it the other way around? Does economic growth bring about a trickle down effect on social development? In the context of Hong Kong, economic policy sets the boundaries within which social policy moves.
Many, like former Central Policy Unit head Goodstadt, refutes this, describing the social welfare spending in Hong Kong as disproportionate to what it can very well afford. Social welfare spending has to be viewed in relation to the actual conditions related to the elderly.
The Hong Kong government is, however, bent on ensuring that its administration of social services does not translate to over-dependence and further erosion of family values as regards care for the elderly.
Its low-tax environment and conservativeness in imposing additional tax burden on its people have also resulted to recurring problems involving the elderly to be unaddressed. Long-term care, the provision of adequate housing, and a more secured financial mechanism to support the elderly remain a challenge to the Hong Kong government.
Social policy then fails to be that impetus to create economic policy reforms to bridge the gap and achieve what Do describes as a combination of economic growth and progress with social fairness. Recently, in SeptemberHong Kong clinched ninth place in the World Competitiveness Ranking, although this is two ranks lower than its spot last year World Economic Forum, Hong Kong has also lived up to being a free market.
Among countries, World Bank ranked it fourth in terms of Ease of Doing Business and third in terms of Starting a Business first in both categories is New Zealand.
What Hong Kong, however, has in economic strength it is starting to be weak in quality of life index.
This rising inequality is largely attributed to a growing number of households with low-incomes and single-earning members, an increasing unemployment rate, especially among young people, and a fast-aging population characterized by high life expectancies. This also mirrors an observable increase in median income among those with high earnings and an unchanged median income among low-earning Hong Kong employees.
Out of this total government spending, 6. In contrast, figures for non-East Asian welfare states or economies were higher. United States at Note that for Hong Kong, of the 6.
This figure increased to 2. Does economic growth translate to more resources for poor people? What influences the relationship between economic growth and social welfare? On the first question: In the ideal context: The conditions capacitate government to translate income to economic activities and social services for marginalized sectors.