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Fostering inclusive growth

May 12, 2017

Peru has achieved astonishing poverty reduction results over the past decade. In 12 years, the country’s poverty rate decreased from 55% to 21%, and extreme poverty decreased from 17% to 4%. These achievements are the result of a longstanding combination of rapid economic and robust social programs targeting poor areas, and they demonstrate how economic gains can be made without sacrificing social inclusion.

There is strong international consensus on the need for inclusive growth, but not enough is known about how it can be achieved. Social protection schemes, conditional cash transfers, and other programs have demonstrated success, but broader questions about what inclusive growth is and how to measure it still linger.  

To contribute to the discussion, IDRC hosted a panel on April 25, 2017, featuring Richard Samans, Member of the Managing Board at the World Economic Forum, and Carolina Trivelli, senior researcher at the Institute of Peruvian Studies and Peru’s former Minister of Development and Social Inclusion. Samans presented the World Economic Forum’s new report and its innovative global index, the Inclusive Development Index, while Trivelli discussed Peru’s journey in balancing economic growth with social progress.

An alternative model for economic progress

The Forum’s report presents an alternative model to understand and measure inclusive growth: it suggests that people and living standards should be at the centre of national and international economic policies.  The report features the Inclusive Development Index (IDI), which ranks the world’s advanced and developing economies based on their performance against key performance indicators ranging from poverty, inequality, public debt, intergenerational equity, and environmental factors. Northern European countries dominated the list of the top ten most inclusive advanced economies, while Lithuania, Azerbaijan, and Hungary led the IDI rankings among developing economies.

“Citizens do not evaluate the success of their country by GDP per quarter, but rather by how the standard of living is progressing for a broad sector of the population,” explained Samans. “But how do we grade economies? We generally do it by looking at GDP.” IDI provides a more nuanced assessment of economic progress than GDP. The report features a policy framework that outlines areas such as education, infrastructure, ethics, investment, entrepreneurship, and social protection as focus points for governments to improve their inclusive growth strategies.

Communication is key

Samans and Trivelli stressed the importance of establishing new and long-lasting platforms for communication that foster public-private partnerships with a wide range of stakeholders, including government, business, academia, and civil society. Trivelli noted that not only is sharing the same vision throughout periods of institutional change essential for inclusive growth, but the way that growth models are communicated must evolve: traditional assumptions must be challenged and experimentation encouraged. Although the use and application of tools such as the IDI may differ between countries, governments can still share and learn from these experiences. As Samans said, “The 2017 Forum’s Report is not the end result; it is a tool for governments to engage in meaningful public-private conversations about the future of our economies and their role in building inclusive societies.”

Learn more about IDRC’s work on inclusive growth: