Stark contrasts in inclusive growth – progress towards equal opportunities needed everywhere

“We used to think of progress as if economy, society and environment were separate spheres and that mindset led to the sustainability and exclusion crisis which we are still in now. In reality, they overlap almost completely, and our mindset is changing. We must improve people’s lives while at the same time we protect the environment. That’s why we have 17 goals with 169 targets.” said Ola Rosling when presenting the progress across all the SDGsSustainable Development Goal for world leaders at the first UN SDGSustainable Development Goal Moment event held in September 2020 -—
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—-. The SDG Moment takes place every September as part of the UN General Assembly, to highlight successes and identify where more action is needed to achieve the Agenda 2030.

One of the challenges facing the achievement of the Agenda 2030 is sustainable economic progress. To this end, UNCTAD has developed an inclusive growth index (IGIInclusive growth index) to contribute to the goals equal and inclusive prosperity for all. This chapter presents the index which combines aspects of living conditions, inequalities and environment with the economy. The new UNCTAD IGI builds on earlier work by UNCTAD and EECEurasian Economic Commission inclusive growth -—
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—-, first published in 2019, and aims to inform analyses and discussions on the inclusiveness of economies, particularly when taking into account social and gender inequalities. Moreover, as inclusive economy must also be sustainable to meet the needs of future generations, by preserving natural resources, the index includes a number of environmental indicators.

What is inclusive growth? Concept and background

Rising inequality and its impact on economies and societies have raised concerns among politicians, economists and the global community. Economic performance and in particular well-being should no longer be assessed by economic growth only; equality and environmental sustainability should also be considered. Many emphasize that existing levels of inequality are not only morally unacceptable, but also economically and politically damaging and corrosive -—
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Economic growth is still considered the most powerful instrument for reducing poverty and improving the quality of life -—
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—-. Research suggests that growth in average income explains 70 per cent of the variation in poverty reduction in the short run, and as much as 97 per cent in the longer term. Any remaining poverty reduction is accounted for by changes in the income distribution.

But similar rates of economic growth can have different effects on poverty, employment opportunities and human development depending on the country, the underlying conditions and governance. The extent to which economic growth reduces poverty depends on the degree of equal opportunities and freedom to participate in activities generating economic growth and to benefit from those. Thus, both the pace and pattern of growth matter for reducing poverty and inequality. The challenge for policy is how to combine growth promoting policies with measures that build and enhance equal opportunities to participate in the economy and benefit from it. This includes policies to make labour markets work better, reduce discrimination, support equal access to education and skills, and increase economic and financial inclusion in all parts of society in a sustainable manner that protects the planet.

Translating inclusive growth into a measurable concept is not an easy task, however. Information on whether changes are happening and whether those changes are moving towards inclusive growth cannot be easily captured by one indicator. The challenge is that inclusive growth is a multifaceted phenomenon, the main characteristics of which are not easily presented in a statistical form.

In 2012, the United Nations Secretary-General Ban Ki-Moon, speaking at a High-Level meeting on ‘Happiness and Well-being: Defining a New Economic Paradigm’, noted the importance of establishing ‘a Sustainable Development Index, or a set of indicators to measure progress towards sustainable development’ -—
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—-. There are initiatives to measure the inclusiveness and sustainability of wealth by taking into account human, social, produced and natural assets. For instance, the United Nations University’s International Human Dimensions Programme on Global Environmental Change in collaboration with UNEPUnited Nations Environment Programme has developed an Inclusive Wealth Index -—
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—-. The -—
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—- Comprehensive Wealth Index considers produced, human, and renewable and nonrenewable natural capital, as well as net foreign assets. There is a proliferation of other summaries of inclusiveness, well-being and sustainability. These summaries propose either a composite index or a dashboard approach and have different perspectives, data sources and approaches. This reflects the complexity of measuring the world and the issues that now are included in the ‘progress’ umbrella, such as environmental sustainability; economic stability and sustainability; social equality and health, life satisfaction, and general well-being.

Inclusive growth in the 2030 Agenda

The 2030 Agenda emphasizes the development of productive capacityUNCTAD defines productive capacities as consisting of the productive resources, entrepreneurial capabilities and production linkages that together determine a country’s ability to produce goods and services that will help it grow and develop -—
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—- as the basis for achieving inclusive and sustainable development. As part of that broad shift in emphasis towards economic, equality and environmental issues, the notion of inclusive growth has received a prominent place in the 2030 Agenda, reflected by SDG 8 in particular – ‘promoting sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all’ and Target 17.19 – ‘ by 2030, build on existing initiatives to develop measurements of progress on sustainable development that complement GDPGross domestic product (GDP) is an aggregate measure of production, income and expenditure of an economy. As a production measure, it represents the gross value added, i.e., the output net of intermediate consumption, achieved by all resident units engaged in production, plus any taxes less subsidies on products not included in the value of output. As an income measure, it represents the sum of primary incomes (gross wages and entrepreneurial income) distributed by resident producers, plus taxes less subsidies on production and imports. As an expenditure measure, it depicts the sum of expenditure on final consumption, gross capital formation (i.e., investment, changes in inventories, and acquisitions less disposals of valuables) and exports after deduction of imports -—
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—-., and support statistical capacity-building in developing countries’.

While the global SDG indicator framework does not directly measure inclusive growth, it includes a number of elements relevant to the concept, including related indicators of economic growth and environmental sustainability which is important from a temporal equality perspective. SDG 8 addresses full employment and decent work; SDG 16 aims to build just and peaceful societies; SDG 10 addresses reducing inequalities by closing socio-economic gaps within and across nations, generations and households; SDG 5 aims to reduce gaps between men and women; SDG 1 and SDG 2 aspire to build a more caring community that protects vulnerable population groups and provides for their most basic needs. Thus, linkages between SDG 8 and other SDGs are several and taken together are consistent with the concept of inclusive growth.

Beyond the 2030 Agenda, there are several dashboards, indicators or analytical approaches that set out to measure inclusive growth or elements of inclusive growth. For instance, increasing economic inclusion is set as one of the goals of the ADB Strategy 2020 -—
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—-. In its framework for inclusive growth, the -—
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—- defines inclusive growth as economic growth with equality of opportunity. Their indicator framework proposes a set of 35 indicators centered on poverty, social inclusion, social safety and governance. Achieving inclusive growth is one of the three priorities of the -—
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—- strategy called "Europe 2020". In this approach, inclusive growth is defined as support for the population through the provision of high employment rates, investment in acquisition of skills, fighting poverty and modernising the labour market.

The definition of inclusive growth must, therefore, go beyond equal participation and consider how the benefits are shared equally. In this study, we define inclusive growth by building on the 1948 Universal Declaration of Human Rights and in line with the overarching principle of the 2030 Agenda to leave no-one behind. Thus, inclusive growth is defined as equal and non-discriminatory opportunities, for everyone, to both participate in the economy and to benefit from economic growth with consideration of environmental sustainability and emphasis on gender equality.

UNCTAD IGI considers economy, living conditions, equality and environment

The first iteration of IGI consisted of three pillars, namely economy, living conditions and equality -—
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—- and was composed of 21 indicators, including one environmental indicator (CO₂Carbon dioxide (CO₂) is a colourless, odourless and non-poisonous gas formed by combustion of carbon and in the respiration of living organisms -—
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—-. emissions under pillar 2). This new, expanded IGI includes more equality metrics addressing gender inequality more broadly (see gender section), and includes a new separate pillar dedicated to environmental issues (see environment section). These were highlighted as potential development areas of the original index, and can now be addressed also due to progress with data availability for countries. The extended IGI is comprised of four pillars and 27 indicators (see Table 1).

Taking relevance and general statistical quality into account, a review of data availability was conducted of all the major global statistical databases. As a result, the 27 indicators were selected as being the most relevant to inclusive growth from this angle and offered the best availability of robust data across countries and time (see Box 1).

Developed countries surprisingly different in inclusive growth

The new composite index of inclusive growth can provide insights about country performance regarding gender equality, living conditions or environmental sustainability as compared to economic development.

In general, higher levels of inclusive growth are associated with more economically advanced countries. Luxembourg, Iceland and Norway are among the highest-ranked countries¹ based on the overall index score. The top-ranking 30 countries are all developed economies (see Map 1). Luxembourg (the highest) and Lesotho (the lowest) were not maintained across the other three pillars. Although, Luxembourg also ranked highest in pillar 4, environment as well. The country has been successful in promoting sustainable transport and was the first country in the world to completely abolish public transport fares in February 2020 -—
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—-. Free public transportation is intended to reduce private car traffic, which is a major driver of climate change including CO₂ emissions and pollution, and also to address income inequality.

The overall index shows that more inclusive growth is often not achieved until a certain level of economic growth and prosperity is reached. However, some developing countries score higher than many developed countries. Developing countries in Africa tend to show the lowest index scores, with an average of 35.

Developed countries appear to be the most heterogeneous group characterized by the largest gap in the overall index scores. For example Luxembourg was ranked highest for the economy pillar (100) whereas the republic of Moldova was ranked lowest (11.6). Gaps between developing economies can also be large, for example Singapore scored the highest, with 81.8, compared with only 2.8 in Sudan. Even more noticeable is the difference in living conditions between countries, with Singapore scoring 88.6 and Niger at 7.0. LDCsLeast developed country are the most homogeneous group, with differences in index scores not exceeding 16 points for pillar 1, economy. Both developing and developed country groups are heterogeneous in terms of living conditions, equality, and environment.

The world is highly unequal in living conditions

As noted by UNCTAD member States in the Bridgetown Covenant -—
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—-, high levels of inequality are the main obstacle to sustainable economic growth and poverty reduction. Economic recovery requires evolving policies at all levels to address these issues. Prosperity gaps between and within countries have been widening for decades. Even Before the pandemicCommonly described by the WHO as ‘the worldwide spread of a new disease’, no strict definition is provided. In 2009, they set out the basic requirements for a pandemic: • New virus emerges in humans
• Minimal or no population immunity
• Causes serious illness; high morbidity/mortality
• Spreads easily from person to person
• Global outbreak of disease.
The US Centre for Disease Control uses a similar approach, but with a reduced set of criteria. It is very difficult to gauge whether the spread of a disease should be termed an outbreak, epidemic or pandemic. In other words, when to declare a pandemic isn’t a black and white decision -—
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—-., nearly 700 million people were living in extreme poverty, and this vulnerability meant billions of people lacked access to modern technologies, including some now considered essential, such as the internet. Women around the world remain, on average, poorer and more vulnerable than men, regardless of their country of origin. Unfortunately, the remarkable expansion of global trade, investment and technology in recent decades has not benefited everyone.²

An analysis of the living conditions pillar reveals, indeed, large disparities between regions reflecting a lack of opportunities. The wide spread of countries in Figure 1 shows that living conditions in different parts of the world today are very unequal. All developed countries score above 60, except for Romania, Albania and Greece. In the rest of the world, countries like Turkey, Malaysia, Chile and Mauritius all score above 70, while others, such as Nigeria or Guinea reach a living condition score of 13 and 10, respectively. In developing Africa, Mauritius, South Africa, Egypt, Tunisia, Algeria, Morocco and Libya scored between 50 and 70. All the remaining African countries scored below 38 for living conditions. The figure also shows the relation between living conditions and equality, with better living conditions often relating to better equality scores as well, and vice versa.

Breaking down the analysis into indicator levels, the biggest challenge for Africa appears to be access to safe water. In 42 African countries, half of the population has no access to clean and safe water. The challenges of inclusive growth cannot be met without infrastructure reforms, such as ensuring sustainable and safe water systems. For developing countries in the Americas, Asia and Oceania, the challenges lie in the areas of income and gender inequality. The availability of Internet connection and logistics performance vary greatly, for example Tajikistan, Afghanistan, Turkmenistan and Bhutan have an average of 1 in 100 inhabitants with a broadbandA general term meaning a telecommunications signal or device of greater bandwidth, in some sense, than another standard or usual signal or device. In data communications, this refers to a data transmission rate of at least 256 kbit/s. In the context of Internet, this can be delivered via fixed (wired) or mobile networks -—
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—-. internet connection. The top three developing countries on pillar equality are Kazakhstan, Argentina and Chile. Many African countries exhibit high gender inequality in terms of labour force participation with the ratio of female to male labour force participation below 0.5. At the same time, to reduce inequalities, all people need an equal opportunity to make a living, no matter who they are and where they are located, and most importantly, have their basic human rights met, including with access to safely managed drinking water.

Developing countries differ greatly in environmental performance

At least since the 1960s, ecological economists and researchers, such as Malte Faber, Nicholas Georgescu-Roegen, Kenneth Boulding, and Herman Daly, have developed economics that take into account limited natural resources and consider sustainable development and issues of intergenerational equity. More recent studies have raised discussions over the potential exhaustion of economic growth in a system where natural resources are limited and keep being depleted. These discussions -—
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—- draw attention to the damaging effects of economic growth to natural life and resources, and the growing waste and pollution problems, not to mention climate change. This discussion is increasingly fueled by growing concerns over social inequality, and the intergenerational sustainability of induced lifestyles.

Countries have responded to these challenges by proposing an ambitious vision for the future in the form of the 2030 Agenda for Sustainable Development -—
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—-. The United Nations Member States pledged to ensure more sustainable and inclusive economic growth, elimination of extreme poverty, reduction of inequalities, and environmental protection.

It is undeniable that we are currently facing some of the most complex and widespread environmental challenges in history. Rapid population growth, climate change, increasing urbanization, and unsustainable consumption have all led to increased stress on the environment and increased conflict over land, water, and energy resources. To effectively address these challenges, it is necessary to measure the interrelations of economy and the environment. However, it is a difficult and complex task, requiring consideration of environmental impact (e.g., environmental impact on biodiversityBiodiversity refers to the diversity within species, between species and of ecosystems -—
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—-., human health, ecosystem function, economic production), the spatial and temporal dimensions of environmental degradation (e.g., severity of environmental diseases, occurrence of extreme weather events), and the variety of stakeholder perspectives (e.g., environment activists, corporate executives, farmers, indigenous community members).

According to the IGI concept, economic growth and socially inclusive co-production associated with greater economic opportunity will be unsustainable without efficient and sustainable use of natural resources (water, land, energy, etc.). The key is to create more economic value with fewer resources in order to not compromise people's future well-being. -—
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—-. In its environment pillar, the IGI considers energy intensity, carbon dioxideCarbon dioxide (CO₂) is a colourless, odourless and non-poisonous gas formed by combustion of carbon and in the respiration of living organisms -—
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—-. emissions, water productivity, and protected land area. These address only a subset of ecological challenges, selected based on a literature review and the availability of environmental indicators for a large number of countries. See Box 1 for more details about these indicators.

The environment pillar differentiates developing countries more than economy. Bangladesh and Lesotho, for example, have almost the same score for economic performance (around 8), but around 50 and 25, respectively, for the environment pillar. On the contrary, for developed countries, differences within the economic pillar are greater than those within the environment pillar. On the same environmental score of 40, Iceland and the republic of Moldova scored around 82 and 12, respectively, on the economic pillar. The top 5 developed countries for the environment pillar are Luxembourg (100), Malta (71.4), United Kingdom (68.8), Ireland (68.2) and Switzerland (67.7). Maldives (70.5), Singapore (69.0) and Seychelles (68.6) are the top 3 countries in the developing region. This is largely due to their good performance in water productivity and energy intensity. Switzerland also shows good performance with relatively low CO₂ emissions per unit of GDP.

As mentioned above, this is not representative of all environmental aspects as only 4 indicators are included. Furthermore, these 4 metrics only capture 60 per cent of the total variance. This pillar will be subject to development as countries start producing more environmental statistics and indicators.

Developed countries generate twice as much waste per capita as developing countries

Solid waste management has been gaining importance, especially as the population continues to grow and cities expand. Many developed countries face problems with solid waste because of its high volume and the low rate of recycling. Developing countries tend to have more individual households who manage their own waste, which leads to less reliance on centralized systems. According to the data from World Bank -—
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—-, the amount of solid waste generated per capita in developed countries is around two times that generated in developing countries. This difference is not just due to the higher population density of developing countries, but also due to the higher levels of consumption of developed countries. In developed countries, the main sources of solid waste are from consumption (43 per cent), waste from households (30 per cent), urban development (14 per cent), and industrial production (12 per cent). In contrast, the main source of solid waste in developing countries is from agriculture (58 per cent), with the remainder coming from urban development (26 per cent), waste from households (12 per cent), and industrial production (4 per cent).

Figure 3 shows a positive correlation between economic development and the intensity of waste generation relative to population. Countries that score high on the economic pillar generate more waste per capita than others. These countries are almost all developed countries. Luxembourg has the highest score in the economic pillar, yet it generates almost 800 kg of waste per capita, annually (over 2 kg per person per day). Japan and the Republic of Korea have a better score for waste generation considering the high urbanization and population levels. The republic of Moldova, among some other eastern European economies, scores low in economic performance and generates high amounts of waste per capita -—
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—-. By contrast, countries of developing Africa generate the lowest amount of waste with an average of 0.54 kg per person per day. The same pattern is observed for the rest of the developing countries, including China with high economic performance compared to other developing countries but low waste generation (0.77 kg per person per day). However, there are few exceptions, Singapore has a relatively high economic performance with low waste generation (0.89 kg per person per day). Singapore set up a Zero Waste Masterplan aiming to increase the overall recycling rate to 70 per cent and reduce waste-to-landfill per capita per day by 30 per cent by 2030 -—
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Solid waste affects the quality of water, land and air and large amounts of domestic waste have many negative impacts on humans and ecosystems. Developing countries therefore face the unprecedented challenges of how to avert the low road unfortunately taken by developed countries, and marry economic growth with environmental sustainability. But the question is how?

Rather than following the same unsustainable path that associates higher economic growth with greater solid waste per capita, developing countries may find, with the support of the international community, new paths to move straight from the top left to the top right quadrant of Figure 3, representing higher economic growth with low waste generation.

Decoupling economic growth from natural resource consumption, pollution and waste generation remains a thorny issue for which global actions and solutions are required and pressing. A sustainable future may require not only technological change but also changes in consumption and social practices -—
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Enhanced gender equality analysis of inclusive growth by considering care and social reproduction³

The new IGI puts more emphasis on gender equality than its predecessor by incorporating more gender equality indicators. It takes into consideration the key role of care, drawing on the framework defined by Braunstein, Bouhia and Seguino -—
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Care can be defined as both a process and an output. As a process, it is primarily perceived as a work activity that involves close personal or emotional interaction with those being cared for -—
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—-. As an output, it refers to all paid and unpaid care activities used as inputs in the production and in the maintenance of the labour force. Care activities, whatever form they may take, have considerably contributed to generating, exacerbating and perpetuating inequality between women and men. Everywhere, women are, or have been until very recent times, reported to spend exorbitantly more time on unpaid work and care than men, essentially due to deeply entrenched stereotypes according to which they are more ‘nurturing’ or biologically better endowed to do this work -—
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—-. As a result, forms of social determinism which give women greater responsibility for this work, have prevailed, with social penalties for failure to conform to these gender norms. Gendered norms and stereotypes about care work have been acknowledged as a key contributor to gender inequality in both the market and the home -—
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Inequality stemming from the gender division of care within societies is detrimental as such to women, who have been carrying this ‘invisible’ burden at the expense of their personal, educational and professional growth, but it has also major adverse effects on economic development, especially through its impact on social reproduction. Social reproduction refers to the efforts it takes to produce, maintain and invest in the labour force, and is often expressed in terms of time and money. Braunstein, Bouhia and Seguino -—
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—- illustrate how social reproduction is organised—the extent to which reproduction takes place in the household, public or market sectors, and the gender distribution of the labour in each— and influences current aggregate demand and long-run productivity growth. Those advocating for greater female education and labour force participation assume that women’s care work is solely an impediment to their participation in paid labour. This ignores the labour as a resource that is produced. Care work that women disproportionately perform also has economy-wide benefits by raising human capacities and thus productivity. In the framework of inclusive or comprehensive wealth indices, care work would be seen as an investment in human capital, rather than a cost or a non-productive activity.

The IGI pillar 3 on equality includes conventional measures of gender parity in school and the labour market, through UNESCO’s Gender Parity Index, ILO’s rates for unemploymentThe unemployed comprise all persons of working age who were: (a) without work during the reference period, i.e. were not in paid employment or self-employment; (b) currently available for work, i.e. were available for paid employment or self-employment during the reference period; and (c) seeking work, i.e. had taken specific steps in a specified recent period to seek paid employment or self-employment. Future starters, that is, persons who did not look for work but have a future labour market stake (made arrangements for a future job start) are also counted as unemployed, as well as participants in skills training or retraining schemes within employment promotion programmes, and persons “not in employment” who carried out activities to migrate abroad in order to work for pay or profit but who were still waiting for the opportunity to leave -—
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—-. and labour force participation and the representation of women in national parliaments. The role of care was not directly captured in pillar 3 originally but two important aspects of it, namely public provisioning for care and reproductive infrastructure, were implicitly taken into account in the overall index, through the inclusion in pillar 2 (on living conditions) of several variables reflecting these dimensions. Infrastructure is an often-neglected aspect of the relationships between social reproduction, gender inequality and growth, but a key determinant and outcome of the gender system. It refers to goods like roads, electricity, sanitation and water that decrease the opportunity cost of market work, mostly by lowering the time intensity of care work by women, but also by lowering the price and increasing the availability of care commodities -—
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The first element added to the new IGI is men’s relative contribution to social reproduction, which refers to the gender distribution of both the time and financial costs of social reproduction. The aim is to capture gender differentials in unpaid care time. Regardless of increasing availability of time use studies, there is not even nearly enough data to carry out a historical analysis. The female-to-male ratio of mean age at first marriage was selected from available proxies with the logic that the greater the gap, the greater the gender inequality embodied in intra-household gender relations, and therefore, the more unequal the distribution of unpaid care time. The female-to-male ratio of mean age at first marriage was shown to be highly correlated with the female-to-male ratio of hours spent on domestic work -—
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The gender wage gap is the second element enhancing the new index. It was proxied by the female-to-male ratio of the share of wage and salaried employment in total employment to capture the relative quality and productivity of employment. For developing countries in particular, where self-employment and contributing to family work is often an indicator of residual unemployment, using relative access to wage employment was deemed a reasonable proxy for gender-based wage inequality in the labour market -—
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The last element included is the extent and quality of the market care sector. As women’s service sector work tends to be concentrated in the caring professions, women’s services employment as a share of total employment (men plus women) was used as a proxy for the extent of the market care sector. This measure was discounted by the extent of income inequality in the economy (by raising it to the power of the inverse of the Palma ratio) on the argument that the more inequality, the lower the quality (and pay) of care sector work.

This new gender pillar therefore aims at measuring gender equity as the equal representation of males and females in key social activities such as education and labour participation with a view of ensuring equal opportunities and treatment at the individual level, but also capturing those countries where gender equity is most likely to entail increases in human capacities and settle a genuine virtuous circle of gender equality, through an approach which level up women rather than a race to the bottom. Such virtuous circle of gender equality unlocks the full potential of economies to grow through a better quality and allocation of human capital, but the extent to which this effectively turns into sustainable economic development also depends on aggregate demand and macroeconomic orientation, as pointed by Braunstein, Bouhia and Seguino -—
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Regional disparities in gender inequality persist

Figure 4 reveals contrasted situations with gender equality of inclusive growth across regions. As expected, developed economies tend to show higher scores and are located closest to each other. Nordic countries perform particularly well: all these countries are found at the very top of the distribution, along with some Eastern European economies like Slovakia, Slovenia and Belarus . In contrast, Hungary, Greece and Romania bring up the rear.

Developing Asia is the region with the widest gaps across countries. At the top, some of these countries do better than several developed countries, including a few Central Asian economies (like Azerbaijan and Kazakhstan) and high-income countries like Singapore and the United Arab Emirates. At the same time, a significant number of Asian countries is found at the bottom of the gender equality ranking, including Iran, Jordan and Bangladesh.

The bottom of the distribution is also populated with several African countries, including Egypt, Guinea and Chad. Africa is the continent with the lowest score on average on gender equality (34). However, it hides, like in Asia, stark disparities. Rwanda, Ethiopia and South Africa are the most gender egalitarian, with scores above the median for all countries.

Latin America and the Caribbean appears to be, on average, the most gender egalitarian developing region in the light of this index, with a score reaching 52. It is also more homogeneous. These countries tend to be located in the centre of the world distribution, with Chile, Argentina and Mexico at the top and Paraguay, Honduras and Uruguay at the bottom.

The position of regions relative to each other has not changed much since 2009 (see Figure 4). Although some developing countries clearly improved their situation, the overall catching-up process of the South, observed in previous decades, did not seem to have occurred within these 10 years, pretty much in line with what was observed for other types of inequality. Developed economies have paradoxically reinforced their leading positions, especially with significant improvements in Eastern Europe. African countries have also slightly improved their rankings. Gaps across countries in the African continent have somewhat narrowed, mostly with countries at the bottom of the 2009 distribution catching up those at the top, such as Ethiopia, Ghana and Mozambique (see Figure 5). While developing Americas have maintained their overall position, Asian countries are those which have lost most ranks on average, given few remarkable upgrades combined with significant deterioration notably in Thailand and Kyrgyzstan. Overall, 12 developing countries show outstanding progression by climbing more than 10 ranks. Seven of these countries are located in sub-Saharan Africa.

Gender equality a challenge for low-income countries in particular

Figure 6 reveals a logarithmic pattern: the more economically developed a country, the more gender equality is observed, with marginally declining gains as economic development increases. However, this does not entail a strict causal relationship between gender equality and economic development. Countries showing higher economic development are not necessarily the best gender performers. This is consistent with gender equality, defined with a particular emphasis on care, being a necessary, albeit not sufficient, condition for long-term structural transformationStructural transformation or change can be broadly defined as the reallocation of economic activity across three broad sectors, agriculture, manufacturing and services, which accompanies the process of economic growth -—
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Countries that have achieved their structural transformation had to pass stages of development where minimum levels of equal contribution between males and females to social reproduction were required. However, in the shorter term, the extent to which gender equality will foster stable and sustained growth depends on demand and the macroeconomic structure, in particular whether growth is predominantly driven by either the wage or the profit share. In the former case, and if gender equality in care is sufficient enough to contain the adverse effect that greater participation of women may induce on human capacities, and thereby investment, higher wages for women are likely to be good for growth. Gender equality and growth reinforce one another.

The interplay between gender equality and economic structure is particularly challenging for low-income developing countries, as illustrated by the horn shape of the curve in Figure 6. These countries generally struggle to find the right mix to kickstart the virtuous circle where both gender equality and economic orientation contribute to sustainable growth in the same direction, ensuring progress in the SDGs. In this regard, social policies which increase investment in care, going hand in hand with macroeconomic policies targeting aggregated demand, can offer solutions.

Conclusion

The broad concept of inclusive growth envisages economic growth that simultaneously contributes to improving everyone’s quality of life equally. In practical terms however, it remains an open question as to what precisely that means. This has implications for how it should be measured and how it can be achieved.

For the purposes of IGI, inclusive growth was defined as a convergence in the quality of life for all population groups within countries, achieved not only through the governmental redistribution of economic performance outcomes, but also through the creation of favorable, non-discriminatory economic conditions, that allow each population group to achieve self-sufficiently quality of life comparable to other groups and contributing to the improved quality of life of the entire population and in a sustainable manner.

The IGI, accompanied by sub-indices and its pillars, can facilitate an understanding of trade-offs and produce rankings, which can be useful in understanding the impact of policy choices as countries need to prioritise elements of economic development, education, labour and political participation, depending on local circumstances. In this study, a dual approach is adopted whereby inclusive economic growth is examined, using a global composite indicator with rankings, combined with principal components or pillars, and assessing challenges and successes by reviewing results for individual subindicators.

As multiple factors affect the inclusiveness of economic growth, policymakers struggle to design effective measures. Statisticians too face challenges in trying to quantify inclusive growth with its complex interrelations with wellbeing and sustainability. Overall, the IGI shows the wide spread of countries’ performance in living conditions, equality and environmental sustainability, underlining the insufficiency of economic growth as a sole measure of progress of nations. It calls for more comprehensive and balanced policies to advance wellbeing that is sustainable and equal, and strong enough to close persisting differences between countries and regions, and address pressing inequalities of opportunity and outcome.

Notes

1. The overall IGI has been compiled for 96 countries for which all information needed for the 4 pillars were available. Thus, the ranking does not take into consideration the missing countries.
2. Conclusions of UNCTAD's fifteenth session (TD/541/Add.2, paras. 28 and 29).

References

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