In the context of the topic, this work gives complete and systematic analysis of social policy as one of the key public policy. This work primarily analyzed specific areas, programs and social policy measures in order to determine the ways in which social policy affects the stimulation of economic development. Social policy was marked by the negative effects of the economic crisis in which, due to unfavorable demographic, social and economic trends and the high social costs of the need to cut costs, taking appropriate reforms, or the transformation of the welfare state. The modernization of the welfare state is a special emphasis on the social transfer system and evaluates its role in stimulating economic development. By presenting current research literature in the area of social policy, in the analytical part of the paper discussed the theses of certain economic school of non-productivity, and productivity of social transfers and social spending to provide assessment on the status and direction of the social policy. This paper analyzes the social protection system in terms of functions and the level of spending on social programs, noted the difficulties encountered and the targets set to be achieved by application. The conducted research on the example of the Croatian proved the importance of social investment in programs of social policy and concludes that the social transfers can be seen as social investments that mitigate poverty, social exclusion and income inequality contribute to the creation of equal opportunities and promoting economic development of the country. However, it was observed that the Croatian model is dominated more protective, but not an active social programs, that is the level and efficiency of spending on social programs, which are traditionally considered social investments, the system of social transfers Croatian below the European average and that it is a less developed system social protection. Despite the above, the strategy of social investment can be seen as a response to economic and social changes. Reciprocity social and economic policy which is increasingly discussed in the concept of sustainable development, a new course of action to achieve social and economic development, greater equality that encourages growth, public interest and increase the quality of life of an increasing number of people.