ECONOMIC GROWTH AND SOCIAL DEVELOPMENT: A STATISTICAL INVESTIGATION*

Mervyn A. King

Review of Income and Wealth, 1974, vol. 20, issue 3, 251-272

Abstract: Some writers have emphasised the adverse environmental and social effects of economic growth, while others have claimed that countries with higher levels of social well‐being also tend to enjoy higher levels of per capita output. The aim of this study is to see what statistical light can be thrown on these issues by collating and comparing seventeen different social indicators for twenty countries in two bench‐mark years, 1951 and 1969. Two methods of analysing data are employed. First, all the countries are ranked for each indicator in turn for a particular year. Each country is then given a score ranging from 1 to 20 for each indicator, and the scores aggregated over the indicators to obtain an overall ranking score for every country. Secondly, the data are subjected to a principal components analysis to examine the correlation between the indicators. The first principal component is a potential candidate for use as a social index number. Changes in these social variables are then related to the rate of economic growth, and no evidence is found of a negative correlation between economic growth and social development. On the contrary, the results suggest a positive correlation between the two, although the strength of this relationship may be diminishing. It is not claimed that the results are in any sense the most preferred test of the form of the relationship between economic growth and social welfare, which must be a matter for subjective evaluation; rather they are seen as a contribution to the body of empirical evidence on this subject.

Date: 1974
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