Inclusive growth: A primer for supply-side concept

The aim of the concept of inclusive growth, which is being promoted in particular by international organisations such as the OECD, is to derive political recommendations on the basis of selected indicators so that a maximum number of socio-economic groups may benefit from the economic progress of a country. On the one hand, this initiative continues the long-running debate on alternative welfare measures beyond GDP per capita. On the other, the discussion on the relationship between growth and distribution is being revitalised. This article deals with the potentials and limitations of the concept of inclusive growth. In principle, it would be welcomed to pay more attention to the distribution aspects of economic growth. However, conventional inclusive growth concepts bear a number of shortcomings: they are theoretically weak, institution-blind, not embedded within a growth context, and normatively shaped. The indicators used focus on results or outcome rather than on growth drivers. In addition, outcome variables are mixed with supply-side indicators. Therefore, the conventional concepts should be further developed into an institution-oriented "inclusive growth accounting" with a focus on the growth factors of labour, education and capital.