Social protection can have a positive impact on growth in developing countries in a number of ways. It can finance investment in health and education, protect assets that help people earn an income, encourage risk taking, promote participation in the labour market, and ease the pain of economic transition. There are inevitably trade-offs. For example, if taxes are raised to pay for spending on social protection, tax payers may have less incentive to work and save. However, social protection, in reducing poverty and inequality, can also lead to greater social unity and a more stable environment for individuals to work, save and invest. Governments must be careful to strike an appropriate balance between economic incentives and greater provision of social protection. Nevertheless, social protection is a potentially important part of a strategy to increase sustainable, poverty-reducing growth.