The Contribution of the Social and Solidarity Economy to Economic Growth

ABSTRACT This work extends the basic analytical framework of macroeconomic growth to encompass the notion of social inclusion and to reduce the inconsistencies between growth and development. Specifically, we introduce the social and solidarity economy (SSE) into the macroeconomic debate on economic growth to acknowledge and making visible its contribution to total output increase, while working towards greater inclusion. Our analytical strategy relies on the discussion of four theoretical models. First, we illustrate a modified version of the Solow model; second, we introduce social inclusion as a labour‐augmenting factor, and we illustrate how it triggers endogenous growth. Third, we modify a simplified model of endogenous growth by introducing among the arguments of the production function social inclusion as a labour‐augmenting factor and by replacing the R&D with the SSE production function. Fourth, we introduce an encompassing growth model to identify the optimal mix of social inclusion and technological progress that may support endogenous growth. The added value of our research is twofold: (1) we lay the foundations for an alternative pattern of development that may fit well the initial conditions of a low resource economy lacking endogenous technological progress, and (2) we propose a logical framework to identify a continuum of trajectories of development, that is coherent with the diversity of initial conditions observed at country level.