The Demands of Inclusive Growth: Lessons from South Asia (The Mahbub Ul Haq Memorial Lecture)

This paper examines the concept of inclusive growth, compares and contrasts it with related concepts such as pro-poor growth and equitable growth, and analyses the recent experience of South Asia through the lens of this concept. A common experience of the region is that spells of rapid growth have been marked by accelerated poverty reduction on the one hand rising income inequality on the other. The contrasting movements in poverty and inequality render intriguing the question of whether South Asia has experienced inclusive growth or not. The reduction in poverty suggests inclusiveness, while the rise in inequality suggests otherwise. The implication is that the growth process has been inclusive in some dimensions but not in others. Closer examination shows that in each country of the region horizontal equity (between groups) has been served better than vertical equity (within groups). Thus, while the growth process has opened up plentiful opportunities for most groups of people to enjoy the benefits of growth, thereby making poverty reduction possible at an accelerated pace, in every group some individuals have failed to link up with the growth process, thereby exacerbating inequality. The problem was that within each group some individuals lacked the skills and endowments required to integrate with the growth process. Improving the ‘integrability’ of these people is an essential demand of inclusive growth.