The political economy of inclusive growth
Abstract:Growth is inclusive if it supports high levels of employment and rising wages. For developing countries, this means acquiring competitiveness in new sectors and technologies. Policies to support inclusive growth have to address significant market failures and have a mixed record across countries. Part of the difficulty lies in the "political settlement" or social order in which policies and institutions are embedded. The political settlement is structurally different in developing countries compared to advanced ones, and across developing countries. Ambitious good governance strategies that aim to achieve strong enforcement of property rights across the board are unlikely to succeed in developing countries. The thrust of reform strategies has to shift towards building pragmatic "developmental" governance capabilities that can enable the implementation of policies that target specific market failures in specific political settlements. The general argument is illustrated with reference to the recent experiences of Thailand.
Document Type: Review Article
Publication date: April 1, 2012