Fostering inclusive growth

Matching efficiency with fairness for sustainable economic development

Inequality, in economic terms, can be inefficient as well as unfair. Indeed, policymakers increasingly recognise that extreme inequality may represent a threat to long-term economic and social development. As a result, there is now more effort being made to look beyond GDP growth figures to see how the benefits of economic development are distributed. 

While a degree of inequality may signal positive incentives to invest, innovate, take risks and work hard; inequality beyond a certain level can cause an inequality of opportunity that hampers social mobility and weakens incentives to invest. 

This session explores policy priorities to match economic efficiency with fairness and looks at strategies to stimulate robust and inclusive economic growth through three main channels:

·Equal opportunities

·Market structure

·Redistribution, public goods and services.

© UNOPS / John Rae

Key points

  • In Europe, inequality is top of the EU’s political agenda.

  • There needs to be a rethink of policies to put people and the planet before profit.

  • Everyone, including young people, should be involved in the process.

  • Investment in infrastructure and training is needed.

  • International cooperation is vital for inclusive growth.

Synopsis

This session emphasised the ink between both economic and development policy, which could spur inclusive growth. It offered angles from a diverse group of speakers. It was pointed out that pre-market, in-market and post-market policies should be combined to achieve this kind of growth. In Europe, inequality is top of the European Union’s political agenda, which wasn’t the case just a few years back. The life quality of all EU citizens should be improved through the sharing of income. The last European Commission addressed the financial crisis; the next must tackle inequalities and fight climate change. In addition, there should be an integrated strategy to share prosperity. Prosperity of all requires the inclusiveness of all – everyone, including young people, should be involved in the process. It was then questioned why growth has become sluggish in some countries despite much investment. Meanwhile, the planet is suffering due to economic growth. Moreover, the benefits of growth don’t necessarily trickle down fully, leaving the poorest even further behind. A rethink is needed of what policies are taken, to put people and the planet before profit. It was also suggested that to break the cycle of poverty, it is essential to: Invest in education. Enhance physical and digital connectivity. Improve public institutions. Provide data on household income and consumption. The need for investment in infrastructure for people to realise their potential was also highlighted. After all, if education, health and administrative facilities are substandard or non-existent, how can cities and towns and their residents flourish? The People’s Republic of China has provided aid to some 160 nations, funding 3,000 infrastructure projects and training more than 300,000 people. There was a call for further EU-China cooperation in this area. It was concluded that stakeholders need to be clear about what they mean by growth – there are differing opinions. Meanwhile, being inclusive and sustainable should always go together. It was also agreed that education and training are vital for citizens to become actors in inclusive growth. Finally, international cooperation is crucial. Without it, the entire process would fail, according to one speaker.

Insight

There is a serious issue with developing countries receiving loans to grow but getting into debt afterwards, which is hampering their chances of achieving inclusive growth. This needs to be addressed.

Organised by

Speakers

Moderator
Elena Flores
Director for International Economic and Financial Relations
European Commission - Directorate General for Economic and Financial Affairs
Maoyu Zhang
Vice-Chairman
China International Development Cooperation Agency
Pierre Moscovici
EU Commissioner, Economic and Financial Affairs, Taxation and Customs
European Comission
Rejoice Namale
Young Leader - Malawi
Tanya Cox
Director
CONCORD Europe
Albert G. Zeufack
Chief Economist
World Bank Group
Grete Faremo
Under-Secretary General and Executive Director
United Nations Office for Project Services (UNOPS)