Inclusive Growth: Measurement and Determinants

28 Pages Posted: 21 Jun 2013

See all articles by Rahul Anand

Rahul Anand

International Monetary Fund (IMF)

Saurabh Mishra

International Monetary Fund (IMF)

Shanaka Peiris

International Monetary Fund (IMF) - African Department

Date Written: May 2013

Abstract

We estimate a unified measure of inclusive growth for emerging markets by integrating their economic growth performance and income distribution outcomes, using data over three decades. Country distributions are calibrated by combining PPP GDP per capita and income distribution from survey data. We apply the microeconomic concept of a social mobility function at the macroeconomic level to measure inclusive growth that is closer to the absolute definition of pro-poor growth. This dynamic measure permits us to focus on inequality as well as distinguish between countries where per capita income growth was the same for the top and the bottom of the income pyramid, by accounting for the pace of growth. Our results indicate that macroeconomic stability, human capital, and structural changes are foundations for achieving inclusive growth. The role of globalization could also be positive with foreign direct investment and trade openess fostering greater inclusiveness, while financial deepening and technological change have no discernible effect.

Keywords: Economic growth, Purchasing power parity, Income distribution, Poverty, Emerging markets, Low-income developing countries, Cross country analysis, economic growth, pro-poor growth, distribution, equity, inequality, inclusive growth, inclusive growth, social mobility, pro-poor, distribution of income, welfare function, dependent variable, social welfare, human capital, gini, reducing inequality, income distribution data, income distribution, pro-poor growth, rising inequality, reducing poverty, growth pro-poor, labor market, non-poor households, falling poverty, inequality determinants, gini index, average income growth, inequality declines, income equality, inequalities of opportunities, equ

JEL Classification: F43, D63, O11, O47

Suggested Citation

Anand, Rahul and Mishra, Saurabh and Peiris, Shanaka, Inclusive Growth: Measurement and Determinants (May 2013). IMF Working Paper No. 13/135. Available at SSRN: https://ssrn.com/abstract=2282970

Rahul Anand (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Saurabh Mishra

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Shanaka Peiris

International Monetary Fund (IMF) - African Department ( email )

1700 19th Street, NW
Washington, DC 20431
United States

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