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Promoting Inclusive Growth

Challenges and Policies

image of Promoting Inclusive Growth

This volume discusses several policy challenges facing countries to achieve and sustain inclusive growth. The volume is based on the proceedings of a conference co-organised by the OECD Economics Department and the World Bank on 24-25 March 2011, which brought together academics and practitioners from advanced, emerging-market and developing economies. While discussions on strong growth typically focus on the pace of economic expansion, those on inclusiveness also delve into the patterns of growth and on how its benefits are shared among the various social groups. An important message that came out of the conference is that strong growth is not necessarily inclusive and that policy action is needed to make sure that pro-growth initiatives also foster inclusiveness.

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The political economy of inclusive growth

Growth is inclusive if it supports high levels of employment and rising wages. For developing countries, this means acquiring competitiveness in new sectors and technologies. Policies to support inclusive growth have to address significant market failures and have a mixed record across countries. Part of the difficulty lies in the “political settlement” or social order in which policies and institutions are embedded. The political settlement is structurally different in developing countries compared to advanced ones, and across developing countries. Ambitious good governance strategies that aim to achieve strong enforcement of property rights across the board are unlikely to succeed in developing countries. The thrust of reform strategies has to shift towards building pragmatic “developmental” governance capabilities that can enable the implementation of policies that target specific market failures in specific political settlements. The general argument is illustrated with reference to the recent experiences of Thailand.

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