The Political Economy of Inclusive Growth: A Review

IMF Working Papers, March 19, 2021

Source details

Authors: Simon Johnson, Priscilla S Muthoora
Date: March 19, 2021
Format: IMF Working Papers, Working Paper No. 2021/082
Core aim: Review the role of the political economy in inclusive growth and document forces shaping redistribution, populism, and calls to rethink the social contract.

Political economy forces on the demand and supply side have weakened redistribution over time.
These forces have contributed to a new wave of populism.
There is growing support for a rethink of the social contract to make growth more inclusive.
The paper discusses broad elements of such a rethought social contract.

Redistribution dynamics:
- Redistribution has weakened over time due to interacting political economy factors on both demand and supply sides.
Rise of populism:
- Weakened redistribution is linked to the emergence of a new wave of populism.
Calls to reform the social contract:
- Increasing support documented for rethinking the social contract focused on making growth more inclusive.
Scope of discussion:
- The paper documents findings and discusses broad elements (high-level design and policy considerations) for inclusive-growth-oriented social contracts.

Subject: Economic growth, Economic sectors, Expenditure, Financial crises, Fiscal redistribution, Inclusive growth, Income, Income inequality, National accounts
Keywords: COVID-19, Europe, Fiscal redistribution, Global, government commitment, government legitimacy, government policy, Growth, Inclusive growth, Income, Income inequality, income skew, Inequality, inhibiting government responsiveness, Labor program, opposition to Redistribution, Political Economy, populist government, public social, Redistribution, skew of voter turnout, Social protection spending