Social welfare, political decentralization and quality of governance in Europe

Rodríguez-Pose, Andrés (1); Tselios, Vasileios (2) (2016). 'Social welfare, political decentralization and quality of governance in Europe' Paper presented at the annual conference of the HDCA, Tokyo 2016.


abstract
European nations allocate public sector resources with the general aim of increasing the social welfare of their citizens through a fair and efficient distribution of investment and benefits. Some nations demonstrate the capacity to increase efficiency and/or to reduce interpersonal inequalities, while others are inefficient and/or more unequal. This geographically uneven capacity of nations to jointly deal with efficiency and equity raises profound challenges for researchers and policy-makers seeking better to understand and influence the process promoting and inhibiting social welfare for people and places internationally. However, who delivers the investments and benefits and how they are delivered are essential in determining social welfare outcomes.
In seeking to provide a step change in our understanding and pioneer new avenues for research on decentralisation, governance and social welfare, this paper aims to provide a rigorous understanding of how political decentralization and quality of governance account for a significant part of differential social welfare levels in Europe. More specifically, using the European Social Survey database, this paper extends the conceptual framework of social welfare based on Amartya Sen’s social welfare index (Sen, 1974, 1976) – which accounts for the trade-off between the maximization of benefits and an equitable distribution of these benefits – and examines the influence of political decentralization (the ‘who’ delivers the benefits) and quality of governance (indicating ‘how’ they are delivered) on the multi-dimensional social welfare in European countries.
The contribution of the present paper centers on the following aspects. First of all, this paper considers social welfare as a multidimensional concept. It examines how political decentralization and quality of governance allocate resources for a fair and efficient distribution of economy, education and health, and of all dimensions of social welfare. It adds value by increasing our understanding of the role that equity and efficiency play in the functioning and performance of social welfare variations, by enhancing our knowledge of the relationship between political decentralization, quality of governance and social welfare, and by strengthening the conceptual tools needed in order to formulate policies aimed at achieving more prosperous and cohesive communities and a greater equalisation of social welfare. Hence, this paper provides evidence and recommendations for innovative social welfare policy for European nations to a better allocation of resources and to enable them to achieve a fair and efficient distribution of benefits. This research strand is characterised by the adoption of rigorous conceptual framework and systematic methods and techniques in the analysis of social welfare. It also contributes to the development of tools and sound applications of the discipline of welfare economics for the analysis of capabilities and functionings (Sen, 1985). Finally, considering both the Europe 2020 strategy (European Commission, 2010) and the World Development Report (World Bank, 2009) emphasis upon inclusive growth, this paper provides regional and social welfare policies which increase efficiency and decrease inequality.
The preliminary findings of the paper indicate that all dimensions of social welfare (i.e. life-related, economy-related, government-related, democracy-related, education-related, health-related and happiness-related social welfare) are an increasing function of a combination of political decentralization and high-quality governance. This paper finally discusses what policies could be used to increase social welfare and what government arrangements are most appropriate for developing and delivering social welfare policies.
References
European Commission, 2010, "Europe 2020: A European startegy for smart, sustainable and inclusive growth",  (COM(2010) 2020, Brussels, 3.3.2010)
Sen A, 1974, "Informational Bases of Alternative Welfare Approaches: Aggregation and Income Distribution" Journal of Public Economics 3 387-403
Sen A, 1976, "Real National Income" Review of Economic Studies 43 19-39
Sen A, 1985 Commodities and capabilities (Oxford University Press, Oxford)
World Bank, 2009, "World Development Report: reshaping economic geography",  (The International bank for reconstruction and Development, The World Bank, Washington DC)

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