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Drivers of Inclusive Development: An Empirical Investigation

Author

Listed:
  • Christoph Doerffel

    (University of Jena)

  • Peter Draper

    (Institute of International Trade at the University of Adelaide)

  • Andreas Freytag

    (University of Jena, University of Stellenbosch, CESifo Research Network)

  • Sebastian Schuhmann

    (University of Jena)

Abstract

Concerns about socially uneven progress and inequality have regained public attention (including that of many populist politicians). The purpose of this paper is to identify the economic policies as well as economic factors that facilitate inclusive development. This paper is a first attempt to empirically estimate the drivers of inclusive development. For our empirical assessments, we apply the Multidimensional Inclusiveness Index suggested by Doerffel and Schuhmann (2020) in a panel OLS regression setup with fixed effects (FE) and GMM estimations for up to 178 countries and a time frame ranging from 1980 to 2018. In FE regressions, we find robust associations with inflation as well as financial sector development in the short and long-run, trade/GDP in the long-run. The GMM results point only to inflation and trade as significant drivers in the long-run and investment in the short run. These results suggest that accessible and well-functioning financial markets paired with low rates of inflation and high trade openness take on a more critical role than government spending. Our results suggest that rudiments of the Washington consensus could still provide guidance for the promotion of inclusive development.

Suggested Citation

  • Christoph Doerffel & Peter Draper & Andreas Freytag & Sebastian Schuhmann, 2021. "Drivers of Inclusive Development: An Empirical Investigation," Jena Economic Research Papers 2021-015, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2021-015
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    More about this item

    Keywords

    Inclusive development; globalization; trade; institutions; policies;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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