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

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.