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Neil McCulloch Globalisation Team Leader

This piece explores the complexities of economic growth, particularly focusing on the per capita income disparities among different socio-economic groups. It emphasizes the importance of maintaining accountability and dialogue across public and private sectors to ensure that the voices of the poor and marginalized are included in growth policies. The text critiques traditional metrics like GDP and advocates for a broader understanding of economic contributions, including non-market activities. The conclusion stresses the need for effective processes in crafting inclusive, sustainable growth strategies.

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Neil McCulloch Globalisation Team Leader

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  1. Some Random Thoughts on Growth Neil McCulloch Globalisation Team Leader

  2. Growth in per capita income of the poor 20% 10% Growth in per capita income -20% -10% 10% 20% -10% y = 1.17x - 0.00 2 R = 0.52 -20%

  3. Growth Incidence Curves

  4. Reflecting big differences in real GDP Growth rates

  5. CAD vs CAF CAD CAF Follow the comparative advantage of the country at every stage of development As countries develop, their endowments change, as to relative factor prices and so the strategy can also change CAD: firms in prioritised areas cannot survive in open competitive markets because they are in conflict with the comparative advantages determined by their endowments • They need subsidies, but these can’t be afforded, so governments use administrative measures (e.g. Monopolies, suppressed interest rates, overvalued currencies, price controls on inputs • These controls then lead to shortages in funds, forex and raw materials

  6. Ensuring that all voices are heard, including those of the poor and marginalised • Accountability mechanisms • Dialogue – between public and private sectors • Do good technical analysis • Monitor, evaluate and kill things that aren’t working • Build effective systems for domestic resource mobilisation Processes for effective growth policy

  7. Gross domestic product or ‘grossly deceptive product’? • Non-market transactions • The ‘care’ economy (underestimation of housewives/husbands work) • Subsistence agriculture • Distribution, nature and quality of goods produced • Leisure time • The hidden economy • Illegal activities • Informal sector • Economic ‘bads’ • No distinction between green and polluting industries

  8. Complements to GDP

  9. We all know that growth is important • We also know that we don’t really know how to create it (far less pro-poor, inclusive, sustainable growth) • => focus on building effective processes for deciding growth policy • Growth is not the ultimate objective • There are several well developed measures which provide more rounded assessments of progress • => standardise their use in the UK, EU and G20 Conclusions

  10. Thank you

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