It is evident from the literature that measuring inclusive growth, both at the country and programme level, is challenging. This is due to the absence of a clear and unanimous definition of inclusive growth and the lack of robust data required to measure, monitor and evaluate the implementation of inclusive growth policies and programmes (McKinley, 2010; Klasen, 2010).
Despite this, there is some consensus on the methods required to analyse inclusive growth, and how this should differ from analysis and measurement of pro-poor growth. The need for an ex ante analysis that examines ways to increase the pace of growth by involving underutilised sections of the labour force is emphasised, rather than ex post tracking of poverty measures to observe the impact of growth on poverty reduction (which is how pro-poor growth is typically measured) (World Bank, 2009; Ianchovichina and Lundstrom, 2009).
Further, unlike measuring pro-poor growth, measuring inclusive growth requires measuring participation in the growth process using indicators such as employment to population ratio (Ramos, Ranieri and Lammens, 2013) or the share of workers in families below the poverty line (McKinkey, 2010). This analysis of both process and outcomes differentiates the measurement of inclusive growth from that of pro-poor growth.
Practitioners should note that the majority of the sources highlighted below focus on measurement of inclusive growth at the country level. The Klasen (2010) paper provides a starting point for measuring inclusive growth at the project or programme level, but this area represents a current weakness in the literature.
Annotated bibliography
Ianchovichina, E. and Lundstrom, S. (2009). Inclusive Growth Analytics: Framework and Application. Washington DC: World Bank.
This paper highlights the need to use different ex ante frameworks to assess inclusive growth depending on the economic context of a particular country. In a country where income levels, growth and investment are low, the authors recommend the use of the Hausmann, Rodrick and Velasco’s (2005) heuristic approach to identifying the most binding constraint to growth. This is because growth is likely to be the main driver of poverty reduction. When growth is high but poverty reduction has stagnated, the authors outline an inclusive growth analytics framework which should be used. First, this requires a background analysis to assess the historical growth and poverty reduction trends in the country, including challenges and opportunities for economic transformation and diversification. Secondly, a profile of economic actors is compiled, enabling practitioners to identify the activities that different groups are engaged in and their potential for growth. Finally, an organisational framework should be used to identify the constraints to inclusive growth for these actors. The authors apply this framework to the case of Zambia.
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Klasen, S. (2010). Measuring and Monitoring Inclusive Growth: Multiple Definitions, Open Questions, and some Constructive Proposals. Mandaluyong City, Philippines: Asian Development Bank.
What indicators should be used to monitor inclusive growth at the country, programme or project level? After defining inclusive growth and reviewing the existing literature on the topic, Klasen emphasises that inclusive growth should be measured both by process and outcomes. Formally, an instance of inclusive growth at the country level is defined as one that exhibits: positive per capita income growth rates; income growth rates for predefined disadvantaged groups at least equal to per capita rates; and expansion of non-income dimensions of well-being for disadvantaged groups that exceed the average rate. At the programme or project level, country level indicators are deemed too crude to measure inclusive growth. Instead, the focus should be on assessing the project’s goals in regard to beneficiaries and comparing this data to an inclusive growth agenda. This can be done by defining indicators such as: ‘Does the project / programme aim to, and be likely to, lead to increased employment of poor people (using the $2.50/day indicator)?’
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McKinley, T. (2010). Inclusive Growth Criteria and Indicators: An Inclusive Growth Index for Diagnosis of Country Progress. Mandaluyong City, Philippines: Asian Development Bank.
This paper outlines a composite inclusive growth index at country level, consisting of indicators in the areas of: (1) growth, productive employment, and economic infrastructure; (2) income poverty and equity, including gender equity; (3) human capabilities; and (4) social protection. The index can be used as a diagnostic tool for assessing country progress on inclusive growth, or as an initial framework to assess the alignment of donor (in this case the ADB’s) assistance to a country’s strategic priorities.
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Ramos, R., Ranieri, R. and Lammens, J. (2013). Mapping Inclusive Growth. Brasilia: International Policy Centre for Inclusive Growth.
While acknowledging the lack of a clear definition of inclusive growth, this report attempts to comprehensively measure inclusive growth at the country level using three indicators: poverty, inequality, and the employment to population ratio (EPR). The authors highlight that poverty and inequality are already established as measures of pro-poor growth and inclusive growth from an outcomes perspective, and that it is EPR that adds an inclusive aspect to this measure through its participatory focus. EPR is used as a proxy for economic participation, as productive employment is poorly defined and difficult to operationalise due to lack of data. The analysis shows that most developing countries have managed to increase their level of inclusiveness due to a decrease in poverty levels and no increase in inequality. The authors argue that this increase in inclusiveness cannot be explained by economic growth, as some countries showed high increases in inclusiveness with low growth, and some of the countries with the worse inclusiveness performances had very high growth rates.
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Additional resources
Deloitte. (2012). Broad-based economic growth diagnostics. New York: Deloitte.
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Adedji, O., Du, H. and Opoku-Afari, M. (2013). Inclusive Growth: An Application of the Social Opportunity Function to Selected African Countries. Washington DC: IMF
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OECD. (2006). Promoting Pro-Poor Growth: Harmonizing Ex Ante Poverty Impact Assessment. Paris: OECD.
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World Bank. (2009). What is Inclusive Growth? Washington DC: World Bank
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