Growth That Reaches Everyone: Facts, Factors, Tools
IMF Blog, September 20, 2017
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- Authors: Rupa Duttagupta, Stefania Fabrizio, Davide Furceri, Sweta Saxena
- Published: September 20, 2017
Overview
- Authors: Rupa Duttagupta, Stefania Fabrizio, Davide Furceri, Sweta Saxena
- Date: September 20, 2017
- Main premise: Economic growth provides the basis for overcoming poverty and lifting living standards, but for growth to be sustained and inclusive, its benefits must reach all people.
- Core concern: Persistent lack of inclusion—defined as broadly shared benefits and opportunities for economic growth—can fray social cohesion and undermine the sustainability of growth.
A few facts (inequality and exclusion)
- Global income inequality has been declining when the world is considered, driven largely by strong growth in many emerging market and developing economies.
- Two-thirds of global inequality is still attributable to differences in average income between countries.
- If countries are considered individually, income inequality rose sharply in many places, with the bulk of the gap opening in the most advanced economies from the 1990s until the mid-2000s.
- Emerging market and developing economies: inequality is still high, even though it declined in recent decades in many of them.
- Labor and service exclusion:
- "over 200 million people around the world are unemployed, with youth unemployment at alarming levels in many countries."
- "Mortality rates for some segments of the population are increasing, including in the United States."
- "Twenty percent of adults in advanced economies remain excluded from formal access to finance: for example, they do not have an account with a financial institution."
- Widespread gender discrimination has led to persistent differences in health, education and incomes between men and women in large parts of the world.
Drivers: technology, trade, and integration
- Technology:
- Has brought large benefits to many economies.
- Increased the demand almost exclusively for skilled labor.
- Trade and economic integration:
- Have been driving forces behind growth and productivity, and lowered prices, benefiting the poor who spend a large share of their incomes on basic goods.
- Have sometimes displaced lower-skilled workers; greater integration has resulted in relocation of factories and greater use of equipment, displacing workers.
- Net effect: benefits from technology and trade have not always been broadly shared.
Policy options to encourage growth for all
- General principle: Do not hold off on productivity-boosting reforms; rather design complementary policies that offer opportunities for all and mitigate tradeoffs between growth and inequality.
- Public investment and services:
- "More—and more efficient—spending on roads, airports, power grids and education can create jobs and boost economic growth."
- Financial inclusion:
- Broadening access to financial services—combined with measures to ensure financial stability—gives more people and firms the opportunity to consume and invest; examples cited: India, Mexico, Rwanda.
- Labor market measures:
- Assistance with job search and job matching and training programs help the jobless find work that matches their skills.
- Countries with high participation in such programs—Finland and Germany—have the lowest long-term unemployment rates among European Union countries.
- Property rights:
- Better property rights boost security to individuals, encourage labor mobility, discourage informal work, and support inclusive growth.
- Fiscal policy:
- Powerful instrument for ensuring inclusive growth and has played a key role in addressing inequality.
- Examples of fiscal measures:
- Closing outcome gaps in education and health between advantaged and disadvantaged groups can reduce inequality and promote growth.
- Social benefits, such as cash transfers, can help protect the most vulnerable.
- Revenue mobilization raises needed financing for social spending and may also contribute to lowering inequality.
- Design matters so the fiscal policy mix can best balance equality and efficiency.
Trade, technology, and complementary domestic policies
- Key point: Domestic policies determine whether trade and technology translate into inclusive growth.
- Evidence from IMF studies:
- Measures that encourage foreign trade boost growth, but can increase inequality if they displace low-skilled workers.
- Attendant reforms—such as accessible education targeted to raise income and productivity of low-skilled workers—can boost growth while reducing inequality.
Implementation and IMF role
- Extending the fruits of growth to the widest possible group requires sustained effort and global cooperation as recognized by the G20.
- The IMF's contribution: continue to work with policymakers around the world—through research, technical assistance and surveillance work—to help achieve inclusive growth.
Growth That Reaches Everyone: Facts, Factors, Tools — Rupa Duttagupta, Stefania Fabrizio, Davide Furceri, Sweta Saxena; September 20, 2017.
Content in this bundle
- 全ての人に届く経済成長 ― 事実、要因、ツール; ルパ・ドゥタグプタ、ステファニア・ファブリジオ、ダビデ・ヒューセリ、スウェタ・サクセナ IMF ブログ 2017年9月20日掲載
- Рост, который приносит благо всем: факты, факторы, инструменты
- 062617
References
- https://www.imf.org/wp-content/uploads/2017/09/BLOG-1024x600-BRAZIL-Sao-Paulo-Unemployed-people-line-up-in-front-of-charity-house_Paulo-Whitaker_Reuters_Newscom.rtrleight818207.jpg
- https://www.imf.org/wp-content/uploads/2017/09/IMF.Inclusive-growth_chart1-1.jpg
- https://www.imf.org/wp-content/uploads/2017/09/IMF.Inclusive-growth_chart2-1.jpg
- studies
