Growth, Equity and the MDGs: Supporting Redistributive and Inclusive Growth

By Kate Higgins

There is strong consensus that growth is important to achieving the Millennium Development Goals (MDGs). We know that growth tends to be positively correlated with improvements in income, and that there is a strong link between growth and poverty reduction. Indeed, high growth in China and India has resulted in considerable reductions in global income poverty, and strong global progress on meeting MDG 1.

But averages can conceal disparities in the way that the opportunities presented by growth, and the benefits of growth, are distributed in a society. High growth rates have not always resulted in significant reductions in poverty – as has been the case in recent years in both Uganda and Tanzania, for example. And even where growth has translated into poverty reduction, the way that growth has been distributed has meant that poor people have not benefited as much as the society on the whole. This has resulted in rising inequality, which has implications not only for the poverty reduction potential of growth, but also future growth (for more on this see the recently published ODI Briefing Paper on Economic Growth and the MDGs).

With this as the backdrop, and with the September 2010 MDG Summit in mind, on Monday 7 June ODI convened a roundtable on growth, equity and the MDGs. Specifically, the roundtable sought to interrogate and identify:•  how growth, and the distribution of the benefits of growth, has contributed to progress on the MDGs;•  where inequality, in the initial distribution and in the impact of growth, fits in;•  the political circumstances that seem most conducive to linking growth to MDG progress; and•  feasible economic and political strategies relating to growth that could accelerate progress on the MDGs between now and 2015.

We agreed that while there is no single solution, it is clear that business as usual will not help us reach the MDGs by 2015.

Collectively, we agreed ten propositions on growth, equity and the MDGs, which we recommend inform decisions in the lead up to and following the MDG Summit in September:

   1. The MDGs need to contribute to transformative change, and while the immediate 2015 targets are important, we need to support change that is economically, politically and socially sustainable and tackles the underlying causes of poverty.    2. We have not done well enough on either equity or economic growth. To achieve the MDGs, an accelerated and transformative process of redistributive and inclusive growth is urgently needed.    3. High initial levels of inequality are a poor foundation for both growth and poverty reduction.    4. The structure of growth is important, not just the rate.    5. Employment matters, but decent work even more so, and needs to be backed by effective and large-scale social protection policies, and trade issues, including trade capacity building, are critical.    6. Gender inequality is a key part of the story, and transformative growth processes need to tackle the challenges women face in terms of care, employment and lack of opportunities.    7. Growth does not automatically lead to progress on the non-income MDGs and therefore social policies – including education, health and social protection – are central and must not be sidelined.    8. Transformative change requires developed country governments and institutions to put their own houses in order in terms of trade policies, financial stability, climate change, green growth and other issues that are often beyond the control of individual low-income countries.    9. Transformative change requires national governments of low-income countries to make interconnected, strategic and coherent decisions on policy areas once seen as discrete, such as industry, trade, migration, taxation, agriculture, social protection and basic services (even if their room for manoeuvre is limited).   10. Policy solutions need to be home-grown and be reinforced by a political settlement and social dialogue that ensures they address not only the needs of society’s ‘winners’, but those who are, for whatever reason, society’s ‘losers’.

The following organisations participated in the roundtable: ActionAid, Department for International Development (DFID), Gujarat Institute of Development Research, International Labour Organization (ILO), Institute for Development Studies (IDS), Overseas Development Institute (ODI), Save the Children, School of Oriental and African Studies (SOAS) and United National Industrial Development Organization (UNIDO). The roundtable demonstrated the value of bringing together a range of organisations, knowledge and experience to address, in an innovative and collaborative way, pressing questions in development policy.

As we move forward to the Informal Hearings of the General Assembly with NGOs, civil society and the private sector in New York next week, and the MDG Summit in September, let us think how we can support an accelerated and transformative process of redistributive and inclusive growth. By doing so, we can ‘keep the promise’ on the MDGs and our global commitment to poverty reduction.

Re-published with permission by the Overseas Development Institute.

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