Last week I emphasised the need for strong definitions when using ‘inclusive growth’ in strategies and work plans. I also highlighted some possible ingredients that should be considered for this.
But once we are clear what it is, what are the steps that we should be taking towards achieving inclusive growth?
Given the diffuse and varied definitions of inclusive growth, it is surprising that there is considerable consensus in the literature on how to achieve or operationalise it. As our working definition highlighted, growth will not automatically be inclusive. Proactive intervention and strategies are needed to ensure wider development outcomes. Briefly, these include 7 aspects:
(1) Investment in human capital is essential. As labour is their main asset, a good level of health and education enables poor men and women both to participate in and benefit from economic growth.
(2) Job creation needs to be promoted as a goal in its own right rather than a hoped-for outcome of growth. In practice this means that we need explicit jobs strategies. Our full paper has some ideas about what this could look like.
(3) Structural transformation of the economy through a move towards more productive economic activities is needed. This is a common element of many growth strategies however, if we specifically want inclusive growth, these policies must focus on the impact they have on the poor.
(4) Progressive tax policies which do not disproportionally negatively affect the poor are needed. Taxation is important because it can make economies more or less pro-poor or exclusionary.
(5) Social protection is essential. The benefits of social protection (as a tool for promoting greater equality, poverty reduction and risk mitigation for the most vulnerable) make it a powerful weapon for policy makers interested in making growth more inclusive.
(6) Policy and practice which promotes non-discrimination, social inclusion and participation are needed. Systematic discrimination against or exclusion of marginalised groups has an impact on economic opportunities and outcomes, as well as prospects for poverty eradication and improving well-being.
(7) Support is needed for the development of strong local and national institutions. An inclusive economy requires an inclusive society with institutions, structures and processes that empower local communities so they can hold their governments accountable.
These 7 areas are unpacked in some detail in our full inclusive growth discussion paper.
A final point to make is that inclusive growth requires sustainable growth. Economic policy makers must consider how to integrate social and environmental objectives and promote co-benefits – we can no longer silo these debates.