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Inclusive Growth; Measurement and Determinants

Author

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  • Rahul Anand
  • Saurabh Mishra
  • Shanaka J Peiris

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.

Suggested Citation

  • Rahul Anand & Saurabh Mishra & Shanaka J Peiris, 2013. "Inclusive Growth; Measurement and Determinants," IMF Working Papers 13/135, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:13/135
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    References listed on IDEAS

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    1. Dollar, David & Kraay, Aart, 2002. "Growth Is Good for the Poor," Journal of Economic Growth, Springer, vol. 7(3), pages 195-225, September.
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    3. Aizenman, Joshua & Lee, Minsoo & Park, Donghyun, 2012. "The Relationship between Structural Change and Inequality: A Conceptual Overview with Special Reference to Developing Asia," ADBI Working Papers 396, Asian Development Bank Institute.
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    5. Aart Kraay, 2004. "When is Growth Pro-Poor? Cross-Country Evidence," IMF Working Papers 04/47, International Monetary Fund.
    6. Acemoglu, Daron & Autor, David, 2011. "Skills, Tasks and Technologies: Implications for Employment and Earnings," Handbook of Labor Economics, Elsevier.
    7. Xavier Sala-i-Martin, 2006. "The World Distribution of Income: Falling Poverty and … Convergence, Period," The Quarterly Journal of Economics, Oxford University Press, vol. 121(2), pages 351-397.
    8. Barry P. Bosworth & Susan M. Collins, 2003. "The Empirics of Growth: An Update," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 34(2), pages 113-206.
    9. Nicola Spatafora & Rahul Anand & Saurabh Mishra, 2012. "Structural Transformation and the sophistication of Production," IMF Working Papers 12/59, International Monetary Fund.
    10. Mishra, Saurabh & Lundstrom, Susanna & Anand, Rahul, 2011. "Service export sophistication and economic growth," Policy Research Working Paper Series 5606, The World Bank.
    11. Barro, Robert J, 2000. "Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
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