The contemporary debate on merits and disadvantages of welfare state is centered on the efficacy and performance of the system. The assessment of social effects of policies pursued by a welfare state was, predominantly, concentrated on the dependence of poverty sphere and income inequalities on the volume of public expenditure. It follows from our analyses that neither the economic theory nor the results of empirical research provide unequivocal opinion to what extent welfare state's policies affect the performance of the economy. The experiences of EU member countries, especially the Scandinavian countries, point to the fact that social security and competitiveness of the economy do not constitute mutually contradictory goals. Productive economy to a smaller degree requires 'a minimal state' but rather depends on effective macroeconomic policy, on the transparency of operation of public institutions as well as on educational and health protection policies, which in turn contribute to the high quality of human assets.
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