Promoting Inclusive Growth

 

 

The countries in the developing world with the best record of promoting inclusive growth—by adopting policies that generate growth, empower the poor, and strengthen the capacity of the state—are those whose elites are united behind an inclusive approach toward nation building. They are not, it should be emphasized, necessarily inclusive in terms of seeking to share their political power with their impoverished compatriots. To the contrary, in many cases they share the exclusionary inclinations of elites throughout the developing world when it comes to deciding who gets to be a minister or president. They are inclusive, however, in terms of seeking, through their policy choices, to make sure government functions for the well-being of all or at least most of the country’s citizens.

In this sense, their rule is based on an implicit “social contract,” on an unspoken agreement between the ruling clique and the rest of the citizenry that allows the elite to remain in power as long as it continues to improve the standard of living of the citizens. Although the Chinese Communist Party (CCP), for instance, has never faced an election, it enjoys substantial popular legitimacy because of the tremendous economic results it has produced. An amazing 87 percent of the Chinese population says it is satisfied with the direction the country is taking. Comparable percentages for other countries don’t come close. The Botswana Democratic Party has won every election since the country’s independence by delivering decades of rapid growth while promoting an inclusive, non-ethnic citizenship and democracy. Oman’s Sultan Qaboos is an autocrat, just as former Egyptian president Mubarak was, but Qaboos has much more legitimacy than Mubarak ever had. Why? Because the sultan has governed with an inclusive vision that has lifted his society out of poverty, improved the status of women, and built roads and schools throughout the country’s rural interior.

Of course, such social contracts can only go so far without democracy. Autocracies in South Korea, Taiwan, Indonesia, and Chile all adopted pro-growth policies that gave their citizens excellent opportunities to improve their lives, but all were eventually forced out of power by very unhappy populations who had acquired an appetite for political power.

Unfortunately, the elites in most poor countries have no such inclusive ambitions. Their vision is restricted to a narrow tunnel of self-interest. Or, rather, the vision of most of the elite is blinkered in this fashion. But elites are not monolithic; they are made up of disparate actors and subgroups, each with their own worldviews and interests. In the great majority of countries, at least some members of the wealthier, better educated, and more powerful sectors of a population have a broader view, a forward-looking vision of a state that can provide opportunity to all its members.

These enlightened individuals face many obstacles when they try to promote an inclusive state-building agenda, some petty, some substantial. Corrupt bureaucrats, self-serving politicians, regional powerbrokers, ethnic and religious leaders preaching gospels of prejudice and exclusivity: individually and collectively, they will try to disarm or destroy anyone working to foster change.

But enlightened individuals are not without their own weapons. They have a trio of tools at their disposal with which they can try to advance their agenda. One tool is social cohesion—that is, the social bonds tying all members of a society together. The more socially cohesive a state is, the more likely its leadership will act inclusively, see growth-inducing policies as in its interests, and invest in strengthening the capacity of the state. The second tool is an inclusive pro-development ideology, a worldview that explicitly calls upon its adherents both to help all other members of a given society, including the poor, and to promote pro-growth policies. The third tool consists of steps that can shape the incentives influencing members of the ruling clique, encouraging them to come together behind an inclusive pro-development agenda.

 

For more information, see:

Poverty Reduction and Growth: Virtuous and Vicious Cycles

By Guillermo Perry, Omar Arias, J. Humberto López, William Maloney, and Luis Servén

 

Politics and Growth

By Gareth Williams, Alex Duncan, Pierre Landell-Mills, and Sue Unsworth

 

Tracking Development in Southeast Asia and Sub-Saharan Africa: The Primacy of Policy
By Jan Kees van Donge, David Henley, and Peter Lewis

 

Human Resource Development Policy for Youth in Asia: Malaysia

Report of Symposium on Globalization and the Future of Youth in Asia

 

The Macroeconomics of Poverty Reduction: The Case of China

Nathalie Bouché and Carl Riskin