Advancing Inclusive Economic Growth


Date: 2015 Description: The USAID-funded Assistance in Building Afghanistan by Developing Enterprises (ABADE) Program provides critical support to Sun Pharma, to expand its product line to include standard-quality liquid vitamin syrup for the Afghanistan market.  Credit: Assistance in Building Afghanistan by Developing Enterprises (ABADE) Program/Steve Dorst © USAID Image
The USAID-funded Assistance in Building Afghanistan by Developing Enterprises (ABADE) Program provides critical support to Sun Pharma, to expand its product line to include standard-quality liquid vitamin syrup for the Afghanistan market. Credit: Assistance in Building Afghanistan by Developing Enterprises (ABADE) Program/Steve Dorst

Inclusive economic growth creates stability, prosperity and new customers for U.S. exports as we have seen with the unprecedented growth of a global middle class. However, lack of economic opportunity as well as real and perceived unfairness relating to corruption or marginalization and extreme poverty can alienate citizens from governments and make populations more susceptible to extremist or authoritarian ideologies.

Despite the growth of the middle class and reductions in extreme poverty, threats to inclusive economic growth include:

  • Income inequality and concentrated wealth inhibit inclusive growth. The socially and politically excluded, particularly women, LGBTI people, and persons with disabilities are at greater risk of poverty, even in countries with a rapidly growing middle class.
  • Corruption and unaccountable governance hinder entrepreneurs and entrench elite interests. Corruption reduces government revenue collection, and stunts public infrastructure and human capital investments. Extremist groups exploit grievances around weak governance and corruption to broaden their appeal.
  • Youth unemployment threatens global stability. Young people in many countries face labor markets distorted by corruption and disrupted by automation and technology. Too few have access to the education, skills training and capital to match the career opportunities that offer social mobility or even a living wage in the 21st century.

First, we have to work together to eliminate extreme poverty through inclusive economic growth – because we know that no society can thrive when entire segments of the population are excluded from opportunity.”

- Secretary Kerry, Remarks at the Frontiers in Development Forum,
Washington D.C., September 19, 2014


Recommendations:

  • Prioritize Inclusive Economic Growth. The Department will advance the Shared Prosperity Agenda, and USAID will continue working with our allies to end extreme poverty through a new model of development. Our strategies emphasize sustained inclusive economic growth, which promotes political and economic stability and expands the middle class worldwide. Inclusive growth does not simply add to a nation’s GDP; it decreases youth unemployment and wealth inequality, promotes gender equality, increases access to electricity, provides pathways out of poverty, and increases government accountability. With the international rules-based system now competing against alternative, less-open models, we will work to ensure that tomorrow’s global economy is defined by a race to the top, not a race to the bottom.
  • Enhance economic leadership and expertise. We will strengthen economic leadership in regional bureaus, better align our overseas economic assignments with the skills of our people, and increase opportunities for internal and external assignments that will deepen our staff’s economic expertise.
  • Improve our use of data and diagnostics. Data and economic diagnostic tools will play a greater role in policy and decision-making, planning, monitoring and evaluation, and program development.