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Inclusive growth is often described
as a utopian concept. Utopia refers to an ideal community or society. The
notion of inclusive growth strives to build an egalitarian society. But
such an idea is usually unachievable in reality, by most nations of the
world.
We are still trapped within the age-old inequalities and violent class
conflicts, with no solutions in sight and yet we dream of an ideal state.
Social cohesion and human dignity lie at the core of inclusive growth.
Rapid pace of growth is unquestionably necessary for substantial poverty
reduction, but for this growth to be sustainable in the long run, it
should be broad-based across sectors, and inclusive of the large part of
the country’s labor force. This definition of inclusive growth implies a
direct link between the various determinants of growth.
The idea is that both the pace and pattern of growth are critical for
achieving a high sustainable growth record, as well as poverty reduction.
Inclusiveness encompasses equity, equality of opportunity, market access
and employment transitions – is an essential ingredient of any successful
growth strategy. Systematic inequality of opportunity is “toxic” as it
will derail the growth process through political channels or conflict.
WHAT IS INCLUSIVE GROWTH?
The economics that disregard moral and sentimental considerations are like
waxworks that,being lifelike, still lack the life of the living flesh”
~Mahatma Gandhi
Inclusive growth is about raising the pace of growth and enlarging the
size of the economy, while leveling the playing field for investment and
increasing productive employment opportunities. Under the absolute
definition, growth is considered to be pro-poor as long as poor people
benefit in absolute terms, as reflected in some agreed measure of poverty.
In contrast, in the relative definition, growth is “pro-poor” if and only
if the incomes of poor people grow faster than those of the population as
a whole, i.e., inequality declines. For growth to be inclusive,
productivity must be improved and new employment & engagement
opportunities created.
Inclusive growth is typically fueled by market-driven forces of growth
with the government playing a facilitating role. Policies for inclusive
growth are an important component of most government strategies for
sustainable growth. For instance, a country that has grown rapidly over a
decade, but has not seen substantial reduction in poverty rates may need
to focus specifically on the inclusiveness of its growth strategy, i.e. on
the equality of opportunity for individuals and firms.
Rapid pace of growth is unquestionably necessary for substantial poverty
reduction, but for this growth to be sustainable in the long run, it
should be increasingly broad-based across sectors, and inclusive of large
part of the country’s labor force. Policies for inclusive growth are an
important component of any government strategy for sustainable growth and
the framework for inclusive growth analytics are eclectic in spirit. The
main instrument for a sustainable and inclusive growth is assumed to be
productive employment & engagement. Employment growth generates new jobs
and income for the individual - from wages in all types of firms, or from
self employment, usually through owning a business in micro firms - while
productivity growth has the potential to lift the wages of those employed
and the returns to the self-employed.
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