Transcript Inclusive Growth

Our Future Depends on Inclusive Growth
Management Convention: Trivandrum Management Association
February 04 – 05, 2011
Vinod Thomas
Director-General and Senior Vice President
Independent Evaluation Group
World Bank Group
Spotlight on Inclusive Growth
New York Times
Davos, Jan 27, 2011
“India is trying hard not to be
forgotten at the World Economic
Forum amid a focus on China. The
South Asian country has brought
the single biggest delegation to
Davos, and advertisements with its
‘Inclusive Growth’ slogan could
be seen not just in the conference
center but on public buses in
town.”
Indian posters at World Economic Forum
IMPORTANCE OF INCLUSIVENESS
What Is Inclusive Growth?
Inclusive growth signals a process by which economic
growth is generated and distributed in ways that are
broad-based, with the lower-income strata in society
sharing in progress.
World Bank Lending and Inclusion?
World Bank Lending by Sector
for FY 2010
Sector
Top Five World Bank Borrowers
in FY 2010
Amount in
US$ Billion
Energy and Mining
$11
Economic Policy
Financial and Private Sector
Development
$10
Country
$10
Amount
in US$
Billion
Transport
$7
India
$9.3
Education
Agriculture and Rural
Development
$4
Mexico
$6.4
$3
South Africa
$3.8
Health, Nutrition and Population
$3
Brazil
$3.7
Urban Development
$3
Social Protection
$3
Turkey
$3.0
Water
$2
Other
$3
Why Does Inclusion Matter?
►It helps reduce poverty sharply—Brazil, past vs. present
►It affects social stability and peace— Egypt, Mexico
►It contributes to growth – Korea, Japan in the 20th
Century
►It may be essential for high growth to continue—China
and India
Falling Poverty Rates in Brazil, India, and China
Brazil
India
20
15
10
5
0
100
Poverty Headcount ($1.25 a day)
100
Poverty Headcount ($1.25 a day)
Poverty Headcount ($1.25 a day)
25
China
80
60
40
20
Brazil
Source: World Bank PovCalNet Data
60
40
20
0
0
1981 1985 1989 1995 1999 2004
80
1977-8 1983 1987-8 1993-4 2004-5
India Rural
India Urban
1981 1985 1990 1993 1995 1997 1999 2005
China Rural
China Urban
Rising Inequality in India and China Versus
Brazil
70
60
Gini (%)
50
40
30
20
10
0
Brazil
China-Rural
China-Urban
Source: World Bank PovCalNet Data.
Note: Zero signifies complete equality and 100 extreme inequality.
India-Rural
India-Urban
Increasing Concentration of Wealth in India
Net worth of local Indian billionaires in relation to GDP
25
Percent of GDP
20
15
10
5
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: Forbe.com and World Development Indicators. Cited from M. Walton (2008).
Kerala Is Different -- Or Is It?
►India: Imbalance between
economic and social
development, with the
latter lagging behind
►Kerala: Imbalance in the
opposite direction. With
only half the level of per
capita income of the
richest state Goa, Kerala
had the highest human
development index.
Source: UNDP HDI data 2005.
ACTIONS FOR INCLUSIVENESS
1. Education and Skills
►Access to secondary and
higher education remain
crucial gaps for India.
►Relevance, quality,
learning outcomes, and
link to skills and jobs are
vital for Kerala.
2. Labor and Employment
►Must link education,
productivity, and jobs
►Protectionism, trade and
domestic employment
►Labor market policies
and greater labor
mobility within India
3. Agriculture, Industry, and Services
►Confronting India’s
urban-rural divide is
essential to inclusion
►Kerala’s challenges in
agricultural financing and
productivity
►Kerala’s crisis in urban
infrastructure,
congestion, and garbage
management
4. Corporate Structure and Finance
►Large corporations with
global reach are essential.
►But they must be part of a
competitive Indian
economy.
►Vigorous entry of small,
medium, and large
businesses is needed
►Reform competition,
judiciary, financial, and
land policies.
5. Governance and Service Delivery
►We need a state that is
accountable to citizens
►Central government over
stretched
►Kerala’s example of
decentralization —, but
how to make it work to
benefit citizens?
“We are trying to give a concrete shape to growth
with a human face or growth with social justice.”
Dr. Manmohan Singh, Prime Minister of India