Inclusive Growth

What is Inclusive Growth?
February 10, 2009 The purpose of this note is to define the meaning of the term ‘inclusive’ growth. It is often used interchangeably with a suite of other terms, including ‘broad-based growth’, ‘shared growth’, and ‘pro-poor growth’. The paper clarifies the distinctions between these terms as well as highlights similarities.

The paper argues that inclusive growth analytics has a distinct character focusing on both the pace and pattern of growth. Traditionally, poverty and growth analyses have been done separately. This paper describes the conceptual elements for an analytical strategy aimed to integrate these two strands of analyses, and to identify and prioritize the country-specific constraints to sustained and inclusive growth.

Defining Inclusive Growth
Rapid and sustained poverty reduction requires inclusive growth that allows people to contribute to and benefit from economic growth. 1 Rapid pace of growth is unquestionably necessary for substantial poverty reduction, but for this growth to be sustainable in the long run, it should be broad-based across sectors, 2 and inclusive of the large part of the country’s labor force. 3 This definition of inclusive growth implies a direct link between the macro and micro determinants of growth. The micro dimension
This note was prepared by Elena Ianchovichina (PRMED) and Susanna Lundstrom (PRMED) with input from Leonardo Garrido (PRMED). The note was requested by donors supporting the Diagnostic Facility for Shared Growth. We thank Carlos Braga, Vandana Chandra, Edgardo Favaro, Loga Gnanasambanthan, Harry Hagan, Fernando Hernandez, Eduardo Ley, Lili Liu, Elina Scheja, and Juan Pedro Schmid for their useful comments on earlier drafts. 1 This statement is in line with the OECD Development Assistance Committee’s policy statement on propoor growth. However, a difference between pro-poor and inclusive growth is that the pro-poor approach is mainly interested in the welfare of the poor while

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