July 13, 2015
What does Inclusive Economic Growth actually mean in practice?

Photo: Conchina is a trainee at the Pemba Professional Training Centre in Mozambique. She has enrolled in courses that enable her to become a specialized plumber which is a job that many women don’t have the chance to pursue.  For more information, please visit our website http://www.sdgfund.org/. UN Mozambique.

New York, 13 July 2015

With the Third International Conference on Financing for Development taking place this week and the ongoing debates about economic development, ‘inclusive growth’ is a high priority on the agenda. Everyone seems to find the idea very appealing but it still remains rather ambiguous as a term.  And seemingly when you ask five economists to define the concept, you end up with six answers. Within the Sustainable Development Goals Fund (SDG Fund), we are keen to understand the various theories pertaining to inclusive growth and to know how to put them into practice. We realize that there’s more than one way to achieve this which means there is plenty of room for creativity.  

Despite the need to achieve inclusive growth, strangely enough there is still a lack of clarity as to what this means in practice, with big differences in approach amongst key institutions. As a concept, it has been included as a proposed goal by the Open Working Group as part of the post-2015 development agenda. Goal number 8 of the 17 Sustainable Development Goals is “promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.”

UNDP’s chief economist, Thangavel Palanivel, explains how there are multiple definitions but some of the common features are: “Growth is inclusive when it takes place in the sectors in which the poor work (e.g. agriculture); occurs in places where the poor live (e.g. undeveloped areas with few resources); uses the factors of production that the poor possess (e.g. unskilled labor); and reduces the prices of consumption items that the poor consume (e.g. food, fuel and clothing).” In other words, sustainable economic growth is not only about expanding national economies but also about ensuring that we reach the most vulnerable people of societies. The ‘equality of opportunity’ and ‘participation in growth by all’ are the very basis of Inclusive Growth.

The Organization for Economic Cooperation and Development (OECD) highlights three problems that growth, in its different levels, fails to tackle: poverty; unemployment; and inequality. Therefore, there is a need to address the quality and inclusiveness of economic growth.

The SDG Fund of the United Nations Development Programme was created in March 2014 with the aim to bring together a range of UN entities, national governments, academia, civil society and business in order to join efforts to support sustainable development activities around the world. Inclusive economic growth for poverty eradication is one of our key areas of focus. For example, in Mozambique, Sierra Leone and Cote d'Ivoire the SDG Fund works with mineral extractive industries to generate economic growth and opportunities for the entire population.

With a budget of $3 million USD, the “More and Better Jobs” programme in Mozambique intends to generate 1,500 direct and 1,500 indirect jobs, 50% of which will be reserved for women. In addition, funds will be used to support 250 small and medium-sized enterprises throughout their start-up and expansion phases and female entrepreneurs will be expected to run 35% of these businesses.

The SDG Fund and UNDP, along with its partners such as ILO, support initiatives that tackle inclusive growth by addressing the following aspects:

1. Create opportunities for good and decent jobs and secure livelihoods
2. Support inclusive and sustainable business practices
3. Promote better government policies and fair and accountable public institutions

The inclusive economic portion of our work is deeply interconnected with other areas of our action, namely Food Security and Nutrition; Water and Sanitation; Sustainability; Gender Equality and Public Private Partnerships. 

We believe that the year 2015 presents a unique opportunity to join forces and work together towards expanding opportunities and reducing vulnerabilities with the hope to ensure sustainable economic growth for all, leaving nobody behind. We must move beyond simply talking about the importance of inclusive growth and generating decent jobs to establishing proper mechanisms that will make such advancements possible.