This rapid review explores the potential trade-offs involved in supporting Inclusive and Green Growth (IGG) in developing countries. The International Institute for Environment and development comments that to bring about real transformation towards IGG will require leadership, to generate societal demand, including by poor women and men, and to supply supportive governance reforms (IIED, 2016).
The question of how policymakers weigh the trade-offs between the costs (possible reductions in investments, income, and consumption) and benefits (possible improvements on the environmental, social, and economic fronts) given that the net impact varies depending on the policy consideration, the context, and the time horizon. According to the World Bank (2012), many
green policies impose economic costs in the short term, such as higher investment or operational costs. But over the longer term, they are designed to yield economic benefits and contribute to
long-term sustainable growth. Even so, short-term costs can create trade-offs between environmental protection and short-term economic growth. For this reason, political and social
acceptability requires that green growth policies be designed with the specific goals of mitigating trade-offs across both space and time and offsetting costs by maximising synergies and short-term economic benefits (such as job creation, poverty alleviation, and increased efficiency).
A range of organisations have developed approaches to address these issues (OECD, 2011; World Bank, 2012; UNEP, 2014; GIZ, 2015); while these concepts or approaches offer much to
delineate green (sustainable) and inclusive growth, many important aspects remain vague. As such, they do not facilitate a systematic assessment of interactions (i.e., synergies and trade-offs) between the green and inclusive dimensions of growth, even though, particularly in developing countries, this is a central concern of policymakers (GIZ, 2015). Becoming more precise implies having to make decisions on the scope of ‘greenness,’ and on the intensity of inclusiveness. These decisions can be politically contested and, given their normative nature, there is no single best solution.
There is no single green growth model. IGG strategies will vary across countries, reflecting local contexts, preferences, and resource. The World Bank (2012) argues that the outcomes of green
growth policies are likely to be good for people living in poverty, but that, nonetheless, these policies should be explicitly designed to maximise benefits and minimise costs to the poor.
In terms of inclusiveness, Klasen (2010) found that people living in poverty may be affected by policies that impact their ability to participate in growth (growth process dimension) and on the
distribution of growth’s benefits (growth outcome dimension). The following case studies of developing countries highlight both successful and unsuccessful IGG policies, as well as examples of trade-offs used:
- Brazil: This country has tried to build consensus for IGG through open and participatory approaches involving political parties and civil society. Approaches that feature iterative, multi-stakeholder involvement and extensive consultation with the private sector and civil society create the transparency and political buy-in to make commitments to green growth sustainable. It is particularly important to ensure opportunities for the indigenous and poor communities to voice their concerns and priorities (Transparency International 2011).
- Burkina Faso: Although one of the poorest countries in the world, Burkina Faso has been implementing the Strategy for Accelerated Growth and Sustainable Development (SCADD) since 2011, which has the potential to improve agricultural yields, productivity and growth of agricultural value-added by 10.7% (Gaye et al 2015: 2). Moreover, SCADD will increase the growth of value-added to secondary and tertiary sectors by 11.8% and 12.5%, respectively. The ultimate impact will be reduced by poverty and better income distribution.
- Ethiopia: Although one of the fastest-growing economies in Africa, and one of the top ten fastest-growing economies in the world, the poorest of the poor in Ethiopia are yet to benefit to the same extent. The country has embarked on structural transformation agenda, as reflected in its Growth and Transformation Plan (GTP) (2011-2015), which places emphasis on promoting the agricultural and manufacturing sectors, and infrastructure development. GTP also recognises the importance of environmental issues (e.g., climate change) and of conservation and management of natural resources for sustainable structural transformation. Ethiopia is also implementing a Climate Resilient and Green Economy (CRGE) strategy. Four initiatives were selected to fast-track implementation of the CRGE strategy – selected to maximise synergies between environmental, social, and economic development outcomes, while managing the costs,
trade-offs, and uncertainties of the transition: hydropower development, rural cooking technologies, livestock value chain, and forestry development. These initiatives offer prospects of immediate economic growth and large carbon abatement potential.
- Tunisia has been suffering from increasing spatial and social exclusion, caused by regional disparities and high unemployment. Intra-sectoral transformation in the agriculture sector through crop diversification, coupled with soil and water conservation is viewed as policies that could contribute to positive agricultural yields and revenues, positive impacts on rural poverty and reduced rural emigration. Energy efficiency and renewable energy also represent a vast field of deployment of IGG policies. The positive impacts on employment of the Tunisian Solar Plan are estimated between 7,000 and 20,000 jobs (National Agency for Energy Efficiency & GIZ, 2012).
The review concludes with a list of core areas that policymakers need to consider when designing inclusive green growth policies (GIZ, 2015: 20). However, there are still gaps in the required knowledge base. Existing academic work is fragmented and focuses on specific policies and other aspects, and thus fails to provide a comprehensive picture. Furthermore, when it comes to the design and implementation of IGG strategies and action plans, there is a dearth of experience in addressing trade-offs and synergies in a more coordinated way and at a higher level. This means that practical examples are limited and very specific to their context.