Inclusive development considers whether development progress is sufficiently widespread for the majority of a population to benefit
The World Bank has a particular focus on the economic capabilities, freedoms and resilience of the bottom 40 per cent of the World’s population and the relatively poor in individual countries.
Per capita incomes can rise but simultaneously there can also be an increase in the scale of relative poverty
The inter-generational nature of development progress also needs to be considered – i.e. creating an environment fit for future generations.
One of the defining debates in development economics is the extent to which state intervention enables inclusive growth or whether a dynamic private sector offers greater potential for lifting development progress.
2. Growth, Development + Macro Issues in ____________
Key Recent Macro Data
Latest annual GDP
Growth (%)
GDP or GNI per capita
(US $, PPP)
Inflation rate (%)
Unemployment rate
(% of labour force)
Fiscal balance
(% of GDP)
Govt debt (% of GDP)
Yield on 10-Year Govt
Bonds (Per Cent)
Investment spending
(% of GDP)
Gross national savings
(% of GDP)
Key Background Information
Currency unit
Currency system
Policy interest rate (%)
Member of a Regional
Trade Agreement?
Current account
balance (% of GDP)
Main corporate tax
rate (Per Cent)
Competitiveness rank
Corruption Perception
Ranking
Ease of Doing Business
Ranking (World Bank)
External Debt
(% of GDP)
Aspects of Development
Latest HDI ranking
Malnutrition data
% of population living
in extreme poverty
Life Expectancy at
birth (years)
Gini coefficient and/or
Palma Ratio
Inward FDI (% of GDP)
Remittances
(% of GDP)
Aid (% of GDP)
3. What is inclusive development?
• Inclusive development considers whether development progress is
sufficiently widespread for the majority of a population to benefit
• The World Bank has a particular focus on the economic capabilities,
freedoms and resilience of the bottom 40 per cent of the World’s
population and the relatively poor in individual countries.
• Per capita incomes can rise but simultaneously there can also be an
increase in the scale of relative poverty
• The inter-generational nature of development progress also needs to be
considered – i.e. creating an environment fit for future generations.
• One of the defining debates in development economics is the extent to
which state intervention enables inclusive growth or whether a dynamic
private sector offers greater potential for lifting development progress.
4. Individuals take part in society
through three interrelated
domains: markets (e.g. labor,
land, housing, credit), services
(e.g. electricity, health,
education, water) and spaces
(e.g. political, cultural, physical,
social). To improve the terms on
which people take part in
society means to enhance their
ability, opportunity and dignity.
World Bank report on Inclusive Growth in
Africa, January 2018
5.
6. Poverty headcount
ratio at $1.90 a day
(% of population)
35% 1990
10% 2013
Number of poor at
$1.90 a day (2011
PPP)
1.86 billion 1990
769 million 2013
7. Inclusive development – some key indicators
• Median household incomes rather than mean incomes
• Income & consumption inequality (using the Gini coefficient / Palma ratio)
• Percentage of the population at risk of extreme poverty
• Gender Parity in Labour Force Participation
• Productive and secure employment v vulnerable work
• Financial exclusion - access to financial services, vulnerability to high interest lending
• Access to affordable and reliable electricity
• Access to basic and digital infrastructure (addressing the digital divide)
• Scale of social protection (broad notion of welfare assistance / safety nets)
• Risk of exclusion based on gender, race, caste, ethnicity, religion, age, occupational
status, location, and disability status
• Exposure to and ability to adapt to the effects of climate change
8. International Poverty Lines
In October 2015, the World Bank
updated the international poverty
line to $1.90 a day
But from 2018 onwards it has
added two new international
poverty lines
• A lower middle-income
International Poverty Line is set
at $3.20/day
• An upper middle-income
International Poverty Line, set at
$5.50/day
9. Income inequality (2015 data)
HDI rank Country
Quintile
ratio
Palma ratio
Gini
coefficient
119 South Africa 27.9 7.1 63.4
125 Namibia 20.3 5.8 61.0
163 Haiti 32.5 6.5 60.8
108 Botswana 22.9 5.8 60.5
188 Central African Republic 18.3 4.5 56.2
139 Zambia 16.0 4.3 55.6
160 Lesotho 20.5 4.3 54.2
95 Colombia 17.3 3.9 53.5
110 Paraguay 14.7 3.5 51.7
79 Brazil 15.5 3.5 51.5
10. Distribution of income 90/10 decile ratio
Income share held by the
lowest 10%
Income share held by the
highest 10%
Venezuela 0.5 34.1
South Africa 0.9 51.3
Brazil 1.1 40.5
Chile 1.7 38.0
United States 1.7 30.2
Malaysia 1.8 34.6
Spain 1.8 26.0
Mexico 1.9 39.7
China 2.0 31.4
Ghana 2.0 31.6
Greece 2.0 26.1
11. Oman:
Male unemployment 14%
Female unemployment: 37%
Saudi Arabia:
Male unemployment 3%
Female unemployment: 21%
Globally, 104 economies
have laws keep women out
of certain jobs
12. Countries with lowest female labour market
participation rate (per cent) in 2015
HDI rankCountry
Female labour force
participation rate (%)
149
Syrian Arab
Republic
12.2
86 Jordan 14.2
121 Iraq 15.1
69
Iran (Islamic
Republic of)
16.2
83 Algeria 16.8
114 Palestine, State of 17.8
169 Afghanistan 19.1
38 Saudi Arabia 20.1
111 Egypt 22.8
104 Samoa 23.1
13.
14.
15. School life expectancy is
a measure of how many
years of education a child
of school-entering age
would receive during his
or her lifetime if the
school enrollment rates
stay the same as of
today.
Average in many lower-
income countries is
pulled down by the many
children who never go to
school.
16. HDI rank Country
Population with at least
some secondary
education (per cent)
186 Chad 1.7
181 Mozambique 2.8
187 Niger 3.6
132 Bhutan 5.8
185 Burkina Faso 6.0
184 Burundi 7.1
175 Mali 7.3
169 Afghanistan 8.8
154 Papua New Guinea 8.8
151 Tanzania (United Republic of) 10.1
162 Senegal 10.2
159 Rwanda 10.5
174 Ethiopia 10.8
Female population with some secondary education
17. 62 percent of the world’s adult
population has a bank account; up
from 51 percent in 2011. Three
years ago, 2.5 billion adults were
unbanked. Today, 2 billion adults
remain without an account.
Mobile money accounts can drive
financial inclusion. While just 1
percent of adults globally use a
mobile money account and
nothing else, in Sub-Saharan Africa,
12 percent of adults (64 million
adults) have mobile money
accounts. 45 per cent use mobile
money accounts exclusively.
18. Strategies to drive inclusive development
• Developmental state:
• Provision of / access to / improved quality of core public goods and merit goods
• Housing, early years education, interventions to tackle malnutrition, road infrastructure, ID systems
• Labour market protections including employment rights, minimum wages, union recognition
• Raising sufficient tax revenues to provide welfare + building progressivity into tax system
• Laws to protect property rights – especially in urban areas – getting mega cities right is key!
• Potential from private sector innovation:
• Impact of foreign direct investment – how inclusive?
• Expansion of AI/ machine learning / drones to improve productivity
• Micro-finance (credit, insurance, savings), expansion of social enterprises (Yunus et al)
• Private sector as a catalyst for inclusive innovation e.g. Fintech, renewable energies
• Role of overseas aid and social capital
• Social capital - people sometimes use social ties to create insurance networks.
• Project aid (e.g. DFID and M-Pesa in Kenya and other countries)
• Randomized controlled trials with basic income (Kenya is a good current example)
19. Evaluating pro-poor (inclusive) development policies
• Fundamental debate over the efficiency and efficacy of the state over the
market in delivering key services
• Growing debate over direction of trade & investment policy i.e.
commitment to globalisation or move towards a more closed system
including protectionism, capital controls, managed currencies
• Ever-present risk of government and regulatory failures
• But risks too from non-intervention – deeper partial and complete market
failures that can undermine competitiveness, growth and development
• How much inequality is a) inevitable and b) tolerable in society
• IMF (2018) “Much has been written about the relationship between
inequality and economic development, but theory remains inconclusive."
Editor's Notes
Note the relatively faster growth (averaged 2009-15) in Eastern Africa – a reflection perhaps of the relative success of these countries in developing higher productivity farming, light manufacturing
International Poverty Lines
In October 2015, the World Bank updated the international poverty line to $1.90 a day
But from 2018 onwards it has added two new international poverty lines
A lower middle-income International Poverty Line is set at $3.20/day
An upper middle-income International Poverty Line, set at $5.50/day
Average or mean-based measures of income, such as GDP per capita, will always be higher than the median — the value at the midpoint — of that distribution, which is inevitably skewed to the right.
An additional measure of inequality compared to the Gini coefficient and the Palma Ratio
Globally, 2.5 billion are covered by safety nets. Yet in low-income countries, only 1 in 5 of the poorest are covered