Inclusive growth is a buzz-word\nin policy circles nowadays, among developed and developing countries. Its\nimportance is increasingly being recognised and highlighted in work plans and\nstrategies of the International Monetary Fund, G20, European Commission and the\nUK\u2019s Department for International Development. As a concept, it has been\nincluded as a proposed goal by the Open Working Group on Sustainable\nDevelopment Goals as a part of the post-2015 development agenda.<\/p>\n\n\n\n
Inclusive\ngrowth is a concept that advances equitable opportunities for economic\nparticipants during economic growth with benefits incurred by every section of\nsociety. This concept expands upon\ntraditional economic growth models to include focus on the equity of health,\nhuman capital, environmental quality, social protection and food security.<\/p>\n\n\n\n
The\ndefinition of inclusive growth implies direct links between the macroeconomic\nand microeconomic determinants of the economy and economic growth. The\nmicroeconomic dimension captures the importance of structural transformation\nfor economic diversification and competition, while the macro dimension refers\nto changes in economic aggregates. Sustainable economic growth requires\ninclusive growth. Maintaining this is sometimes difficult because economic growth\nmay give rise to negative externalities, such as a rise in corruption, which is\na major problem in developing countries. Nonetheless, an emphasis on\ninclusiveness\u2014especially on equality of opportunity in terms of access to\nmarkets, resources and an unbiased regulatory environment\u2014is an essential\ningredient of successful growth. The inclusive growth approach takes a\nlonger-term perspective, as the focus is on productive employment as a means of\nincreasing the incomes of poor and excluded groups as well as raising their\nstandards of living.<\/p>\n\n\n\n
Inclusive growth as the literal\nmeaning of the two words refers to both the pace and the pattern of the\neconomic growth. The literature on the subject draws a fine distinction between direct income\nredistribution or shared growth and inclusive growth. The inclusive growth\napproach takes a longer-term perspective as the focus is on productive\nemployment rather than on direct income redistribution, as a means of\nincreasing incomes for excluded groups. Inclusive growth is, therefore,\nsupposed to be inherently sustainable as distinct from income distribution\nschemes which can in the short run reduce the disparities between the poorest\nand the rest, which may have arisen on account of policies intended to\njumpstart growth. While income distribution schemes can allow people to benefit\nfrom economic growth in the short run, inclusive growth allows people to\n\u201ccontribute to and benefit from economic growth\u201d.Inclusive growth deals\nwith the idea that economic growth is important but not sufficient to generate\nsustained improvements in welfare unless the dividends of growth are shared\nfairly among individuals and social groups. At the same time, there is\nincreasing recognition that, in addition to income and wealth, people\u2019s\nwell-being is shaped by non-income dimensions, such as their health and\neducation status. The level and distribution along these non-income dimensions\nare therefore key aspects of Inclusive Growth, making it a multidimensional\nconcept. Moreover, to be relevant inclusive growth needs to be\npolicy-actionable, allowing policymakers to better understand the trade-offs\nand complementarities that exist across policy areas and the tools that can be\nused to achieve improvements in both the level and distribution of income and\nnon-income outcomes. This is why it is important to consider the various\ndimensions of inclusive growth simultaneously and not one by one.<\/p>\n\n\n\n
Despite the agreed urgency to\nachieve inclusive growth, there is surprisingly little clarity as to what it\nactually is, with important differences in approach among key institutions and\ngovernments: the World Bank, Asian Development Bank (ADB) and International\nPolicy Centre for Inclusive Growth (IPC-IG) all have different definitions and\nunderstandings. Even in the absence of a single shared definition, a look\nacross the board at the initial attempts at definitions that have emerged shows\nsome convergence in thinking on important aspects of inclusive growth. Small\nbusinesses play an important part in national and local development,\ncontributing significantly to employment, economic growth and service\nprovision. They also play an important role in inclusive growth.<\/p>\n\n\n\n
Inclusive growth is a distinct\nconcept from standard economic growth and is accompanied by a unique set of policy\nrecommendations. It is often, however, included in donor approaches without\nmuch clarity about how an inclusive approach differs from the standard\napproaches. In mitigating against this risk, it is important that we work\ntowards a definition of inclusive growth and look at the key factors that would\ncontribute towards growth being more inclusive. To this end, in this essay, I\nhave tried to identify the key elements of inclusive growth as a step towards a\nworking definition of this concept. The various aspects that are important for\nmaking growth more inclusive have been considered in some detail. My\nrecommendations to pursue inclusive growth are : <\/p>\n\n\n\n
1. Develop clear definitions of what is meant by\ninclusive growth. <\/strong>Definitions matter\nbecause they clarify and set the objectives that will determine policy and\nspending choices. <\/p>\n\n\n\n 2. Ensure that the objectives for inclusive\ngrowth are explicitly defined. <\/strong>These should\nfocus on broader sustainable human development objectives than increasing\nincomes or GDP, such as gains in human development, poverty and inequality\nreduction, increased economic participation and promotion of the sustainable\nuse of natural resources and climate protection. <\/p>\n\n\n\n 3. Develop proactive strategies to ensure growth\nthat is inclusive<\/strong>. This does not\nhappen automatically. In addition, economic policy-makers should proactively\naim to maximise social and environmental co-benefits. <\/p>\n\n\n\n 4. Develop clear guidelines, objectives and\nindicators on how inclusive growth will be achieved and measured. <\/strong>This includes clearly articulating the methodology for implementation\nand theory of change behind a proposed approach. <\/p>\n\n\n\n 5. Small businesses<\/strong>\u2014where\nmost poor people work\u2014play a key role in making growth more inclusive. They,\ntherefore, need to be prioritised in inclusive growth strategies. Given their\nimportance for poor women and men the direct links between small businesses and\ninclusive growth should also be a focus for future research and policy\nevaluation. <\/p>\n\n\n\n Some recipes for inclusive\ngrowth contain many familiar elements from standard growth strategies such as\nmacroeconomic stability and economic openness. This is not surprising when some\ninstitutions and governments see achieving high growth rates as the major\ncontributing factor and prerequisite for achieving inclusive growth. However,\ngovernments and donors need to think outside the box and consider some of the\nwider factors contributing to inclusive growth. In fact, the inclusive growth\ndebate challenges many of these old orthodoxies and has thrown up some new\npriorities and characteristic approaches. Some of the key ingredients for\ninclusive growth that are generally agreed upon include: investment in human\ncapital, job creation, structural transformation and broad-based growth,\nprogressive tax policies, social protection, non-discrimination, social\ninclusion and participation, strong institutions.\n\nThe relationship between growth, inequality and poverty reduction are\nlong contested and therefore their roles in \u201cinclusive growth\u201d are equally\nunsettled. Different institutions have traditionally adopted quite different\nstances. With regards to growth and poverty, the World Bank, for example,\nfocuses on a high pace of growth as a pre-requisite for achieving poverty\nreduction, whereas IPC-IG avoids presuming a connection between economic growth\nand levels of inclusion. When it comes to outcomes, most discussions around\ninclusive growth focus on patterns of income growth. Growth is deemed to be\ninclusive, depending on the extent to which poor men and women have benefited\nthrough increased income. However, the Organisation for Economic Co-operation and Development (OECD) defines\ninclusive growth as having happened when other indicators of improved\nwellbeing, aside from income, have also improved for citizens: \u201cWe also need to\nrethink growth as a means and not as an end. We have to give priority to the\nquality of growth over the quantity of growth. For this, we need new models and\ntools to measure progress and the quality of our lives.\u201d\n\n\n\n<\/p>\n","protected":false},"excerpt":{"rendered":" Inclusive growth is a buzz-word in policy circles nowadays, among developed and developing countries. Its importance is increasingly being recognised and highlighted in work plans and strategies of the International Monetary Fund, G20, European Commission and the UK\u2019s Department for International Development. As a concept, it has been included as a proposed goal by the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/www.competitionreview.in\/blogs\/wp-json\/wp\/v2\/posts\/239"}],"collection":[{"href":"https:\/\/www.competitionreview.in\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.competitionreview.in\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.competitionreview.in\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.competitionreview.in\/blogs\/wp-json\/wp\/v2\/comments?post=239"}],"version-history":[{"count":1,"href":"https:\/\/www.competitionreview.in\/blogs\/wp-json\/wp\/v2\/posts\/239\/revisions"}],"predecessor-version":[{"id":240,"href":"https:\/\/www.competitionreview.in\/blogs\/wp-json\/wp\/v2\/posts\/239\/revisions\/240"}],"wp:attachment":[{"href":"https:\/\/www.competitionreview.in\/blogs\/wp-json\/wp\/v2\/media?parent=239"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.competitionreview.in\/blogs\/wp-json\/wp\/v2\/categories?post=239"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.competitionreview.in\/blogs\/wp-json\/wp\/v2\/tags?post=239"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}