On 16-17 October, the European Commission will be hosting EU Development Days, a two-day forum on international affairs and development cooperation that will see Heads of State, Nobel Prize laureates, business leaders, and development professionals meet to discuss some of the global issue that are at risk of slipping down the international agenda in the wake of the economic crisis. Debating Europe will be covering DevDays, and we will be publishing posts on each of the three main themes of the event: food security (which we’ve already looked at here), inclusive growth and how to encourage the private sector to engage in development.
Today’s post is about “inclusive growth” (i.e. economic growth that is broad-based and benefits the majority of the population). The last decade has seen the steady rise of developing countries across the world, led by the BRICs (Brazil, Russia, India and China). However, rapid economic growth has often been accompanied by rising inequality; the World Bank reports (PDF), for example, that: “Inequality is on the rise in several countries in East Asia, most notably in China [and] is contributing to social tensions.“
Whilst the World Bank also reports (PDF) that poverty rates in Africa (as in the rest of the world) have been falling due to sustained economic growth and development, the most recent report from the Africa Progress Panel argues that political instability from growing inequality risks derailing that growth, and that “Africa’s wealth disparities are among the biggest in the world.”
The Africa Progress Panel goes on to argue that:
In China, where political leaders have identified rising inequality as a threat to social stability and future growth, the Gini index is 42 [the higher the index the greater the level of inequality]. There are 24 countries in Africa with higher inequality scores than China. In Mozambique, Kenya and Zambia, the Gini index is between 45 and 55, while in Botswana and South Africa it is over 60.
The report’s conclusion is not that rapid economic growth is somehow unimportant, however. Rather:
The challenge is to harness economic growth to a more equitable distribution of opportunity and income. Meeting this challenge requires public policy action on two fronts.
First, governments need to mobilise revenues from growth and invest those revenues in the basic services and economic infrastructure that offer poor people greater opportunities.
Second, governments need to foster an environment that enables the creation of jobs and more resilient livelihoods, so that poor people can contribute to economic growth, ‘produce’ their way out of poverty and secure a greater share of the benefits from growth.
The European Development Days forum in October will be tackling some of these issues, with high-level panels looking at how we can tackle the causes of global inequality and encourage inclusive and sustainable growth. We’d like to take some of your comments and questions to these panels and publish their responses.
So, what do YOU think? How can we tackle global inequality, to ensure that economic growth is inclusive and benefits the greatest number of people? Is economic inequality inevitable if you want rapid economic growth? Or is it possible to grow your economy and distribute the benefits fairly and equally? Let us know your thoughts and comments in the form below, and we’ll take them to policy-makers and experts to hear their reactions.
Ahead of the European Development Days forum, the International Development site DevEx (an official partner of EU DevDays) has published an article on inclusive business models in the developing world. You can read the article here.