There is clear consensus among donors, practitioners and academics that creating productive employment is central to fostering inclusive growth. The 2013 World Development Report (World Bank, 2013) states that countries should pursue an explicit jobs strategy rather than rely on growth related policies to create jobs. This is because growth policies may not take into account the necessity of supporting women, young people and other vulnerable groups who may require specific support in entering the labour market.
As the private sector is likely to be the main source of productive employment, practitioners should take into account literature on private sector development when conducting interventions and devising policies. There is agreement among authors working in this area that systemic change should be implemented by altering the incentives for the private sector in order to bring about pro-poor or inclusive growth (OECD, 2006).
The literature also highlights the need for policymakers to recognise the important role of the informal economy in developing countries, and that steps should be taken to improve productivity and conditions in this sector while encouraging formalisation. Also emphasised is the need for governments to encourage growth in sectors of the economy with the potential to create high-productivity jobs (OECD, 2009). Furthermore the growing literature on inclusive innovation (see Heeks et al, 2012), which encourages the development of new goods and services for and/or by the poor, should be noted by practitioners or policymakers seeking to develop job strategies for inclusive growth.
OECD. (2009). Promoting Pro-Poor Growth: Employment. Paris: OECD.
This report evaluates the role of employment in promoting pro-poor growth. It argues that productive employment is the main route out of poverty for most poor people, including those in fragile environments, and therefore needs to be the central objective of development cooperation. The authors emphasise the need for policymakers to recognise the size and importance of the informal economy in many developing countries, and the steps that need to be taken to increase productivity, working conditions and social protection in this area while implementing policies to encourage formalisation. The report highlights the need to expand the participation of women and young people in the labour market, through policies to address gender-based discrimination and provide vocational training. The need for a sound macroeconomic framework as a means of supporting growth and job creation, creating incentives to support socially responsible employment practices, and the importance of better statistics in understanding the functioning of labour markets are also explored.
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OECD. (2006). Promoting Pro-Poor Growth: Private Sector Development. Paris: OECD.
This report evaluates the role of private sector development in promoting pro-poor growth. While the private sector is widely recognised as the engine that drives the pace of growth, the way in which it develops also profoundly influences the pattern of growth. The authors identify a set of interlinked factors that must be in place for private sector actors, which include poor people, to benefit from the growth process. The correct incentives must be in place to promote entrepreneurship and investment, while competition and innovation should be encouraged to increase productivity. International trade must also be harnessed, markets made accessible to the poor (e.g. through access to banks and removing barriers to formalisation), and the risk reduced (e.g. through provision of insurance and savings products). It is also noted that donors should aim to improve the impact of private sector development on poverty reduction by bringing about systemic change rather than ‘picking winners’ in certain sectors viewed as essential for the poor.
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Wong, P.K. (2012). Innovation and Inclusive Growth in Emerging Economies. Singapore: National University of Singapore
This presentation highlights that many emerging economies face the issue of having a significant proportion of their population in low-productivity sectors, while many SMEs lack scale to invest in innovation capabilities. Two innovation challenges for governments are outlined. Firstly, developing the capabilities of local firms to catch up technologically with global competition will be critical. This can be done through pooling the technological resources of SMEs in R&D consortia, or through technology ‘ecosystems’ via incubation and financing programmes. Secondly, addressing the social needs of the ‘lower pyramid’ population and speeding up structural transformation will be key. Policies to promote innovation for the lower pyramid include focusing public R&D spending on the lower pyramid and encouraging social entrepreneurship and new impact investment models to complement traditional public subsidies.
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Heeks, R., Amalia, M., Kintu, R. and Shah, N. (2012). Inclusive Innovation: Definition, Conceptualisation and Future Research Priorities (Development informatics working paper no. 53). Manchester: Centre for Development Informatics
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- World Bank. (2013). The World Bank Goals: End Extreme Poverty and Promote Shared Prosperity. Washington DC: World Bank
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