Social protection: An Effective and Sustainable Investment in Developing Countries

A  comprehensive  and  effective  social  protection  system  is  an  essential  component   of  a  market  economy.  The  success  of  developed  countries  has  –  in  part  –  been  the   result  of  their  investments  in  social  protection.  On  average,  OECD  countries  spend   around  14%  of  GDP  on  their  national  social  protection  systems.  As  Figure  1  indi-­ cates,  developed  countries  would  look  very  different  without  investments  in  social   protection,  with  significantly  higher  poverty  rates.  Germany,  for  example,  invests   around  16%  of  GDP  in  social  protection,  reducing  the  national  poverty  rate  from   32.5%  to  8.9%  and  bringing  significant  other  benefits  such  as  lower  inequality  and   greater  social  cohesion.  In  terms  of  expenditure,  social  protection  is  the  largest   public  service  in  developed  countries.

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