Does economic transformation lead to social exclusion?

Does economic transformation lead to social exclusion? This question, which occupies many minds currently, is surprisingly old, and occupied the minds of many of the great social scientists. But – as I discovered in writing a paper for the UNIDO Industrial Development Report – the views have been radically different, marked by optimism versus pessimism, and individualism versus structuralism oppositions. Technology has had radical impacts on forms of social cohesion, and de-skilling and unemployment has generated anomie and protests. But groups and societies have adapted and regenerated social relations. New ICTs are changing social relations, but they are not evaporating. Thus, there is a need for a multi-sector and disciplinary view, on how the interaction between structural change and cohesion evolve in different contexts, and the institutions that mediate social outcomes.

A growing body of literature and data that allows empirical analysis of links between economic change (with GDP as main indicator), and various aspects of social cohesion, at individual, group and institutional level. However, and particularly for developing countries, data is still very limited, it limits cross-country analysis (which in any case has its own limitations), variations around means (e.g., in gender equality) are large, and the understanding of causation is very limited indeed. Nevertheless, there is evidence that gives ground to optimism, in the sense that what may be considered progress in economic factors goes together with progress in social cohesion (though this may be associated with greater collective action). There are suggestions that forms of social cohesion can contribute to economic progress as well as vice versa. Perhaps most surprising, the international data does not show that the growing income inequalities since the 1980s – the subject of another paper for the UNIDO Report – has led to a decline in social cohesion in a broader sense.

International data provides indications that public policy (economic, industrial) has the potential to promote growth or technological change and inclusion simultaneously. Analysis emerging from the World Value Survey indicate such a secular complementary trends, as do the initial findings from the Indices of Social Development. Political institutions develop and evolve mediating conflicts that may arise from structural transformation, including the social policies and welfare states that emerged across the OECD.

These are of course very broad generalisations, focusing on averages and long-term trends. But context-specific research, particularly on industrial relations indicates how these complementarities may emerge. Even in low-skilled occupations there are possibilities to strengthen as sense of identity or belonging, which can contribute to productivity. Trade union organization – like state intervention – is not necessarily anathema to economic growth or structural change; most likely such forms of organization help mediation of possible trade-offs and interest groups.