Inclusive Growth

As you can probably soon tell from this post, I am a newcomer to the bloggers' field, but am taking a risk and trying to overcome this fear of unkown by posting something now.

I wanted to share a brief note which I recently prepared on "Inclusive Growth" answering the following four questions by summarizing what has been written on this topic:

1. What is Inclusive Growth

2. How to measure it

3. How has India fared against these measures, and

4. What works

Below is the Executive Summary, but if anyone is interested, I can e-mail a copy of the paper upon request. A better developed version will be posted on the CDF website.

India’s post 1990’s economic growth has made it one of the world’s fastest growing economies in the world. Its GDP growth rates of up to about 9% in the last few years is historically unparalleled except by the neighboring China. With the rapid growth rates, however, come new challenges and new questions. One such challenging question concerns the spread of the benefits of growth across different segments of society.
To ensure that growth has been well distributed, India’s Planning Commission has made Inclusive Growth their explicit goal in the eleventh five-year plan. The concept of Inclusive Growth has dominated discussions across India. Its popularity has sparked intense discussions among politicians, economists, policymakers and the general public. In addition, Inclusive Growth has been the focus of studies by bilateral and multilateral aid agencies such as the UN, World Bank, Asian Development Bank, Foundations such as the ICICI Foundation, NGOs, and Civil Society Organizations alike. For instance, UNDP recently called “What is Inclusive Growth” the “million dollar question.”
Despite all the attention that Inclusive Growth has received in the last few years, there lacks a precise and agreed upon definition of the term. Overall, the literature is divided between two concepts a) whether the benefits reach the poor and b) whether the benefits reach the poor proportionately more than it reaches the non-poor. By the first definition, India may have performed quite remarkably in the last two decades, although the magnitude is hotly debated. By the second definition, India’s performance against inclusive growth seems more lackluster. Gini coefficient, a measure of income inequality, indicates that income inequality in India has increased both at an overall level as well in almost all of the states both for urban and rural areasTo address these challenges going forward, evidence suggests that there are a number of macro and micro level interventions that are poverty reducing and thus conducive to Inclusive Growth. At macro level, there is little doubt about the usefulness of the augmented Washington Consensus (Rodrik, 2006). At micro level, evidence suggests that improving the following factors will help accelerate poverty reduction: reduction of inequality, not limited to income inequality, access to public infrastructure and services especially health and education, access to markets, accountability and voice, good governance, and the role of civil society organizations, women empowerment.