## Beyond Growth: the Importance of Inclusion

_IMF Blog, July 7, 2011_

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**Canonical URL:** [Beyond Growth: the Importance of Inclusion](https://www.imf.org/en/blogs/articles/2011/07/07/beyond-growth-the-importance-of-inclusion)

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## Bibliographic details
- Authors: Antoinette M Sayeh
- Published: July 7, 2011

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### Overview
- Author: Antoinette M. Sayeh
- Publication date: July 7, 2011
- Central question: While growth is necessary for poverty reduction and employment creation, is it sufficient to ensure that benefits accrue broadly across populations?

### Why inclusive growth matters
- Inclusive growth creates jobs and raises income, which:
  - Advances social justice, peace, and political stability.
  - Can start a virtuous growth circle: the poor spend most of additional income on basic needs, supporting demand, which fuels further income and profit growth.
  - Larger-scale production and better health and nutrition improve worker productivity, reducing costs and increasing output.
- Empirical suggestion: high income inequality, especially in low income countries, inhibits growth.
- Link to development goals: progress on inclusion matters for progress toward the Millennium Development Goals by 2015.

### Constraints that have limited the benefits of growth
- Resource-concentrated growth:
  - Growth concentrated in natural resource sectors (mining, oil) tends to be capital intensive, creating little domestic employment.
  - These sectors can be difficult to tax and often result in only a small share of profits being retained domestically and used to reduce poverty.
- Persistent reliance on small-scale/subsistence agriculture:
  - Majority of population in most African countries depends on small-scale or subsistence agriculture.
  - Limited public infrastructure investment and limited access to financing have kept agricultural productivity low and households cash poor.

### Country practices and policy examples toward more inclusive growth
- Policies to create jobs, increase productivity, and diversify activity:
  - Mozambique: new poverty reduction action plan increases spending for job-creation in agriculture.
  - Uganda: earmarked public savings to finance a new hydro-electric project.
  - Tanzania: intensified efforts to eliminate red tape impeding private enterprise.
  - Emphasis: public infrastructure (transportation, water, energy) and regulatory reforms.
- Strengthening social safety nets:
  - Ethiopia: cash and food transfer program that improved food security and retained livestock holdings.
  - Rwanda: cash transfer and public works programs that reduced extreme poverty dramatically.
  - Purpose: reduce income inequality and protect vulnerable people during economic downturns.
- Managing natural resource revenues:
  - Countries reviewing or changing tax regimes for natural resources to retain more profits domestically, including Democratic Republic of the Congo and Liberia.
  - Simultaneous introduction of more transparent procedures to manage these resources.

### IMF engagement and support
- Program and policy advice:
  - Reinforce countries’ efforts to boost productivity and diversify production.
  - Support processes to identify and select investment projects with widespread returns.
  - Promote simple and transparent rules for starting businesses.
- Technical assistance for natural resource management:
  - Redesigning tax systems.
  - Establishing sovereign wealth funds as special accounts to manage and safeguard monies until needed.
  - Advising on rules for spending and mandatory public monitoring.
- Social protection design and financing:
  - Support for designing and financing social safety nets to provide social protection and create automatic stabilizers that rapidly expand government spending to contain impacts of economic shocks.

### Outlook and priorities
- The IMF’s next Regional Economic Outlook for Africa will explore these questions in more depth (to be released in October of this year).
- Near-term priority for many countries: establish economic stability and create conditions for robust economic growth.
- For an increasing number of countries, the distribution of the benefits of growth has become a dominant policy agenda item as they strive to meet the Millennium Development Goals by 2015.

*Source: Beyond Growth: the Importance of Inclusion — Antoinette M. Sayeh, July 7, 2011*

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## References

- [more spending on health and education](http://blogs.imf.org/2010/09/20/making-up-for-lost-time-getting-back-on-track-to-the-millennium-development-goals/)
- [https://www.imf.org/wp-content/uploads/2011/07/slide26.jpg](https://www.imf.org/wp-content/uploads/2011/07/slide26.jpg)
- [https://www.imf.org/wp-content/uploads/2011/07/slide14.jpg](https://www.imf.org/wp-content/uploads/2011/07/slide14.jpg)

_Source: https://www.imf.org/en/blogs/articles/2011/07/07/beyond-growth-the-importance-of-inclusion_