Ensuring economic growth for all (en)

Glaring gaps in prosperity worldwide have prompted a growing consensus that economic growth must benefit all socioeconomic segments of the population. Putting an end to inequality hinges on, in part, access to employment or business opportunities for the world’s poorest but achieving this goal is one of the biggest policy challenges facing governments, corporations and civil society leaders. Whether it is broadband access or daycare options, we need to identify the ideas that will achieve inclusive growth in the developing world.

Canada’s International Development Research Centre (IDRC) and the World Economic Forum have partnered to help leaders move from well-meant objectives to concrete action. This partnership is building on the existing work of the forum to break new ground through The Inclusive Growth and Development Report.

The Forum’s IDRC-supported project is collecting case studies of inclusive growth successes to feature in a digital knowledge bank. This qualitative data will help to implement national inclusive growth strategies that make the most of public, private-sector and civil resources.

Inclusive growth is a strong current running through much of IDRC’s programming. These investments — including the ones highlighted below — are generating insights that feed into the broader discussion of solutions for inclusive growth, especially in regard to women.

WOMEN’S UNPAID BURDEN

One of the key barriers to women’s economic growth, as illustrated in the Forum’s Global Gender Gap Report, is the time they spend doing unpaid work caring for their families — an average of five hours a day compared to just one and a half hours for men.

The provision of daycare in low-income countries in Africa and Asia could reduce this imbalance and help unlock the full potential of women in the workforce. Our work is contributing to the growing evidence on the economic returns of expanding affordable and quality childcare options for poor women. Finding sustainable financing models for low-income countries is critical to sustain these gains.

THE POWER OF LARGE BUYERS

Beyond the double burden of work and home responsibilities, women face many disadvantages gaining access to training, finance and markets. IDRC’s work with WEConnect International is proving that helping women to register their businesses can improve their market access. In a oneyear pilot, 600 women-owned businesses in India registered and 60 obtained certification to supply large companies. The pilot helped generate additional revenues of C$170 million (US$126.8 million) and employ more than 4,600 people across India. There is scope to replicate this success in other countries.

BANKING FOR POOR WOMEN

The importance of increasing women’s and other marginalized people’s use of formal financial services and training is clear. Evidence from Proyecto Capital has proven that a savings account and financial education can improve the performance of small businesses by as much as 10% — and at a very low cost.
Their findings have helped convince governments in Latin America to adopt policies in support of financial intermediation solutions with a goal of ensuring that 10 million people living in poverty will have enhanced economic opportunities by 2020.

BOOSTING FARM INCOME

In sub-Saharan Africa the majority of economically active women work in agriculture, constituting 43% of the global agriculture labour force. Reducing the drudgery of their work and linking women to markets is key to inclusive growth.
In Kenya and Uganda, for example, a public-private partnership is encouraging the production and consumption of beans, a crop commonly grown by women. Developing pre-cooked bean products for low and middle-income households is helping provide income for women growers and, at the same time, reducing the cooking time of beans from as long as three hours to just 15 minutes, thereby saving on energy costs. More than 20,000 smallholder farmers are supplying beans to a new factory and yields of beans have increased threefold, leading to higher incomes for producers.

BROADBAND ACCESS

Our thinking on inclusive growth also embraces the need for affordable access to information and communication technologies (ICTs). Given that the poor spend a greater proportion of their earnings on digital technologies than higher-income groups, better access would have an immediate impact on people’s lives.
A study in East Africa found that increased access to ICTs over a two-year period was associated with a 3.7% improvement in poverty status. The study showed that over the course of a decade the gains resulting from ICT access for the most vulnerable were twice that for the non-poor.

Similarly, a study in Latin America confirmed that broadband availability was associated with a rise in incomes of up to 7.5% over two years in Ecuador. According to this study, broadband can effectively contribute to economic and social development only when combined with investments in human capital, such as teacher training and digital literacy programmes for women.

EVIDENCE-DRIVEN SOLUTIONS

History shows that the poorest and most vulnerable do not benefit equally from economic growth, nor are they extended the opportunity to participate in and contribute to growth. Women’s access to daycare, big buyers, financial services, the agricultural processing industry and broadband are solutions that contribute to inclusive growth. The key is to generate solutions backed by solid evidence — evidence driven by people in developing countries and capable of reaching large populations across multiple socioeconomic segments.
These findings demonstrate the possibility of achieving economic growth that benefits all, not just the privileged few. We need more examples of ways we can make growth inclusive. By changing how the world envisions and promotes growth, we are working together to ensure that the historical pattern of economic growth will not be repeated.