Inclusive Development: prospects and policies

Jakarta, Indonesia

What are the prospects for inclusive growth? What risks does technological change pose for inclusive growth? And what economic policies should be implemented to achieve the goal of inclusive growth?

In a set of ESRC GPID briefing papers, Terry McKinley, Director of the Centre for Development Policy and Research at SOAS argues that the prospects for inclusive growth are, ‘not promising’ without greater policy intervention.

First, he advances a critique of a narrow conceptualisation of ‘inclusive growth’ and in its place, advocates for a more ambitious concept of ‘inclusive development’ encompassing an economic and political agenda of structural change, which resonates with a recent ESRC GPID briefing paper by Kim et al who advocated ‘inclusive structural transformation’.

Second, McKinley highlights labour-displacing technological change which, he argues, “has massive implications for achieving inclusive development”. He cites reports by McKinsey which project considerable adverse impacts of robotization and digitalisation–impacting on as many as 2.6 billion workers worldwide by 2030 including 13% of workers in China, up to 10% of workers in Mexico and up to 6% of workers in India, all of whom are likely to need to switch occupations in the next decade or so.

Third, McKinley identifies a set of policies which would allow governments to foster inclusive development given such dramatic economic and technological change. These include macroeconomic policies in the fiscal, exchange rate and monetary domains; structural policies in the fiscal, financial, and industrial domains; and equity-focused policies which are designed to enhance the access of poor households to economic and social opportunities.

In the equity domain, McKinley particularly stresses the need to prioritise skill development and training. Measures for skills upgrading currently constitute only a ‘miniscule component of many systems of social protection’, McKinley argues, but they are now urgently needed in light of the threat of rapid job-displacing technological change.


Related ESRC GPID readings

Briefing paper 5 Terry McKinley The Global Economy and the Challenge of Inclusive Growth 10/11/2017
Briefing paper 7 Kyunghoon Kim, Andy Sumner and Arief Anshory A Job-Centered View of Inclusive Structural Transformation 10/11/2017
Briefing paper 8 Terry McKinley Economic Policies to Address Inclusive Development 25/01/2017
Briefing paper 11 Terry McKinley Prioritising Skill Development and Training to Promote Inclusive Development 23/03/2018