Social Protection in the Developing World: The Development after Development

• Author Jeonghwan Yun
• Series315
• Date2025-05-15

Social protection systems—encompassing social insurance, social assistance, and labor market programs—are essential for fostering inclusive development. In developing countries, where vulnerability to poverty, economic shocks, and inequality remains high, the need for robust social protection frameworks is urgent in developing countries.

Recent reports by international organizations highlight the gaps in social protection worldwide and provide a blueprint for action.

The International Labour Organization's (ILO) World Social Protection Report 2020-22 states that over 4 billion people (69.4%) in their working age, globally—predominantly in developing countries—lack any form of social protection. Social assistance programs often exist but are fragmented, underfunded, and inaccessible to those who need them most. Informal workers, who make up as high as 81% (India, 2020) or 74% (Rwanda, 2020) of the workforce in low- and middle-income countries, are particularly excluded from the social protection schemes.

The World Bank Group’s (WBG) State of Social Protection Report 20251 reports a more recent status of social protection in developing countries. Upper-middle-income countries (UMICs) spend more than 6 percent of their gross GDPs on social protection, lower-middle-income countries (LMICs) 3.7%, and low-income countries (LICs) 2%. UMICs provide an average of 61% of their population with social protection benefits, LMICs 42%, and LICs only 25%. While having 4.7 billion people covered by some form of social protection is a major achievement, there still remains the challenge of accommodating another 2 billion under an adequate social security system. The report predicts the developing world needs another 38 years to fully cover the poorest 20% in LICs and MICs.

A crucial barrier to extending social protection in developing nations is fiscal constraint. The World Bank's The State of Social Safety Nets 2018,2 suggests that even modest investments in social protection yield high returns in poverty reduction, inequality alleviation, human capital development, and resilience to crises. For example, the UNDP's Human Development Report 2021/20223 emphasizes that countries with strong social protection systems have been better able to withstand shocks such as the COVID-19 pandemic. However, building sustainable systems requires not only financial resources but also institutional capacity and political will. Developing countries often face governance challenges, from weak administrative systems to issues of corruption and inefficiency. Strengthening national registries, investing in digital payment systems, and ensuring transparency are critical steps forward.

To establish a strong institution for social protection system in the developing world, the international community has a significant role to play. The Sustainable Development Goals (SDG 1.3) explicitly call for implementing nationally appropriate social protection systems for all. International organizations can provide technical assistance, policy guidance, and financial support to help low-income countries bridge the gap.

Especially, for those developing countries which have already achieved a certain level of economic development, strengthening a social protection system is not only crucial, but also plausible in terms of their financial affordability and administrative capability. These developing countries may also face a new set of social problems, ironically, partially due to industrialization and urbanization. Once basic development needs are fulfilled, social protection is the next step agenda for further sustainable development, and also to avoid the so-called “middle income trap.” Such importance of establishing a strong social protection system is what Korea has learned through its development experience in the 1980s and 90s.

Korea’s development cooperation has majorly focused on poverty reduction and enhancing economic vigor in developing countries. While such economic and humanitarian challenges for basic needs remain, a new set of social challenges emerges as the developing world grows. Social conflicts between industrialization, new sets of health concerns, new forms of urban poverty and inequality due to urbanization have become a new development agenda. Korea’s experience of designing social protection may provide a new toolkit for cooperating with such emerging problems. Furthermore, it is also an opportunity to establish a new form of cooperation with higher performing UMICs where traditional ODA is not the first priority. It is time to rethink poverty paradigms and diversify the means of cooperation with the developing world.

Jeonghwan Yun ✉️

Ph.D., Associate Research Fellow, Development Cooperation Policy Team

Center for International Development Research

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