From warfare to welfare states? Social and military spending in the Baltic States 1918–1940

ABSTRACT

This paper provides first broad cross-national quantitative comparison of social transfers and total social spending by the central government in Estonia, Latvia and Lithuania in 1930 and cross-time comparative case study of social and defense spending patterns of these three countries during the entire interwar independence period. To compensate for many gaps in the available historical statistics of national income, the ratio of social to military expenditure (Sivardian Index), used in the contemporary UNDP Human Development Reports is retrospectively applied for cross-national comparisons along with share (%) of social spending in national income. Main findings: by 1930 the transformation of warfare state into welfare state was most advanced in Latvia due to the strength of the Latvian Social Democratic Worker party. With 2.12% of social transfers and 4,15% of total social spending in total output, Latvia followed closely behind Scandinavian Nordic countries, and was ahead of all Eastern European countries. After failed Communist putsch in Estonia in 1924, bringing Left parties into strategic defensive, the advancement of welfare state stagnated in Estonia on the level of authoritarian and less economically advanced Lithuania.

KEYWORDS:

• Baltic States 1918–1940
• welfare state
• social spending
• defence spending
• Sivardian Index

JEL CLASSIFICATION:

• CODES: N34
• N44
• H53
• H56
• H60

Acknowledgements

We thank Professor Jari Eloranta for sharing his data and anonymous reviewers for constructive criticisms and advice.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 For few exceptions in vernacular languages see Kļaviņa (1991), Zālīte (1999), Peep (2005). Some important work was published in Soviet time: Ahelik (1964, 1980), Mančinskas (1971).

2 See e.g. UNDP, 1990, p. 71; UNDP, 2018, p. 103.

3 Some of our sources provide data about GDP, but others inform about GNP or (for interwar time) about national income. Because of basic similarity of these measures, we designated their common referent as ‘total output’ (TO).

4 We may e-mail for interested readers technical information about these models in the supplement file. Because of space limitations models with total social transfers, total social expenditure and military expenditure as dependent variables are also located in this supplement.

5 For UK we used for 1930 the mean value of the 1913 and 1937 education expenditure provided by Roser and Ortiz-Ospina (2019).

Additional information

Funding

This project has received funding from the European Social Fund (project number 09.3.3-LMT-K-712-01-0006) under grant agreement with the Research Council of Lithuania (LMTLT)