The Inclusivity Brief
Inclusive growth seems to be the element to rejuvenate a ragged long-running linear economy. Here, Su Aziz breaks it down for better understanding in the second edition of WIEF In Focus magazine.
Lately, the term ‘inclusivity’ is ubiquitous, you hear it often and ardently uttered by policymakers and laymen alike. Inclusivity is the general direction now in which most economies are heading. More than that, it reflects the state of inequality the world has come to, which has bred uncertainty in economies and populations. Often times, many have wondered if inclusivity is the antidote that’ll eradicate marginalisation rooted by the old economic model.
‘Many countries in the [ASEAN] region have successfully shifted a large part of their resources into higher-productivity areas [such as] by moving from agriculture to industrial production, to advanced manufacturing and services. But this is not enough. To be sustainable, new growth models also [need to] be much more inclusive,’ stated Christine Lagarde, managing director of International Monetary Fund (IMF) during her keynote speech at the High-Level International Conference 2018 in Jakarta. ‘Recent IMF research has shown that, when the benefits of growth are shared more broadly, growth is stronger, more durable and more resilient.’
That’s why, rethinking the traditional model of economic growth has been highlighted by the Organisation for Economic Co-operation and Development (OECD) for some time now. Reinstating certainty onto the global economy, it seems, may take a concerted effort. It’s important for governments, institutions and businesses to foster inclusive growth. To orchestrate this harmoniously, OECD launched their Inclusive Growth Initiative in 2012 to establish a strategic policy agenda that’ll shape this new vision of growth.
Furthermore, to create more opportunities for all people and steady a trembling economy, inclusive growth must be made to succeed. This is so that growth doesn’t stagnate at the top level but instead, flows down to the lower strata of the society.
That’ll be ideal, of course.
The reality is, according to The Five Characteristics of an Inclusive Economy: Getting Beyond the Equity-Growth Dichotomy published by the Rockefeller Foundation in 2016, the concept of growth trickling from top down is proven to be fundamentally flawed. Instead, the article stated, it was discovered that when investments were made to make economies more equitable from bottom up there were positive results for everyone and for a longer term.
Making an economy inclusive, of course, takes more than just growth and equity. Other factors to consider especially in today’s fast-changing world, according to the article, are: participants of the economy such as consumers, workers and business owners; whether growth is lasting and sustainable; whether people have an equal shot at economic opportunities, and; if there’s some minimum level of security and predictability associated with the opportunities.
‘We need to ensure that this new economy is not just a boost to productivity and growth, but also a foundation for a world that works for young and old, rich and poor, urban communities and remote villages. Our common responsibility is to help create a smarter economy, a fairer economy, an economy with a human face,’ Christine Lagarde declared during the conference in Jakarta.
Photo by Tadeusz Lakota on Unsplash
For more on the latest topics related to business, technology, finance and more, read our digital versions of In Focus magazine, issue 1, issue 2 and issue 3.