It depends: Varieties of defining growth dependence

Abstract

Many socio-economic systems require positive economic growth rates to function properly. Given uncertainty about future growth rates and increasing evidence that economic growth is a driver of social and environmental crises, these growth dependencies pose serious societal challenges. In recent years, more and more researchers have thus tried to identify growth-dependent systems and develop policies to reduce their growth dependence. However, the concept of 'growth dependence' still lacks a consistent definition and operationalization, which impedes more systematic empirical and theoretical research. This article proposes a simple but powerful framework for defining and operationalizing the concept of 'growth dependence' across socio-economic systems. We provide a general definition consisting of four components that can be specified for different empirical cases: (1) the system under investigation, (2) the unit of measurement of growth, (3) the level of growth and (4) the relevant functions or properties of the system under investigation. According to our general definition, a socio-economic system is growth-dependent if it requires a long-term positive growth rate in terms of a unit of economic measurement to maintain all its functions or properties that are relevant within the chosen normative framework. To illustrate the usefulness of our scheme, we apply it to three areas at the heart of the existing literature on growth dependence: employment, social insurance systems and public finance. These case studies demonstrate that whether or not a system is growth-dependent hinges not only on the empirical properties of the system itself but also on the specification of the concept of growth dependence. Our framework enables coherent, robust and effective definitions and research questions, fostering comparability of findings across different cases and disciplines.