The Contribution of the Social and Solidarity Economy to Sustainable Economic Growth: A Modified Solow Model Approach

Abstract

Abstract This paper illustrates the interplay between economic growth and social inclusion, whereas the latter is produced by the organizations of the social and solidarity economy, highlighting its synergies with the pursuit of the Sustainable Development Goals. Assuming that economic growth and social inclusion are not antinomic concepts, but, rather, the two sides of the same coin, technological progress can be restricted to the subset of the eco-efficient innovations, and social inclusion can be added to the arguments of a production function, thus obtaining a macroeconomic model encompassing the three dimensions of sustainable development. By introducing social inclusion in a modified Solow model, the paper illustrates how the former is an important driver of economic growth and can complement input accumulation, reducing the inconsistencies between growth and development. Given the heterogeneity among equilibrium level of output of different countries, this model identifies an alternative pattern of development, compatible with the initial conditions of a low resource economy lacking endogenous technological progress. This research provides a strong case for the integration of socio-economic and environmental concerns into policy planning, building on the specific resources that can be mobilised and the peculiar socio-economic needs expressed by society. JEL codes: O00; O35; Q01; L30