Suchergebnisse

In this working paper I define inclusive growth as growth conducive to increasing the size and economic command of the middle class. I suggest a definition of the middle class based on absolute and relative measures of country-based income distributions, and present evidence of change in the size of the "middle class" for selected developing countries. I then review how macroeconomic policies shape the environment and incentives for inclusive growth, focusing on three areas: fiscal discipline, the more rule-based the better; a fair tax and redistribution system; and a business friendly exchange rate. The adoption of macro policies that favor the middle class lays the foundation for more economically and politically sustainable development. While on the whole sound macro policy that is good for the middle class is also likely to be pro-poor, tradeoffs may exist with respect to tax, expenditure and transfer programs and responses to economic shocks. Governments should consider the weighted welfare outcomes of alternative approaches to macro policy, rather than un-weighted growth or overly weighted poverty outcomes.

The world is not 'flat'. Globalization is disequalizing, rewarding the already rich while leaving the poor behind, making rising inequality more, not less likely. There are three reasons. First, the economic gains generated by efficient global markets are not equally shared. Second, global markets are imperfect and many developing countries do not have mechanisms for insuring (poor) people against market failures. Third, trade, migration, and intellectual property regimes at the global level naturally reflect the greater market power of the rich. To mitigate the asymmetric impacts of globalization we need a global polity that can address unequal endowments, whether in the form of lack of educational opportunities or weak institutions.