Inclusion is a term that includes a lot. In a broad sense, it means the empowerment of a group of people, particularly with the purpose of reducing poverty, ensuring participation in political life, restoring justice (as is the case with racial inclusion) and so on. In a narrower sense it means, for example, the need to introduce softer laws for foreigners to buy real property in Thailand (a rough quote from a World Bank report). In Russia , school inclusion is the type of inclusion that’s most known; it means inclusion of children with disabilities into the normal educational process. More and more often, there is talk of women’s inclusion, i.e. expansion of women’s equal rights, and age inclusion (for example, inclusion of children aged 14 or above in the labor process). We have managed to collect some data about this ambiguous phenomenon.
Who needs inclusive growth
The driving forces of inclusion, among which are almost all the key international organizations such as the UN, the IMF, the World Bank, promote it, recommend it to their members, and explore it. Thus, the World Bank report devoted to this phenomenon discusses a variety of economic actions which can be taken to improve and expand the so-called inclusive growth.
In particular, I refer to a more equitable distribution of benefits in the producing countries, where the mining companies themselves usually employ a small proportion of the population. The report also mentions the need to involve the government institutions where the market is failing in order for more people to join the economy. Those are very good intentions. Furthermore, the report concludes that it is essential to maintain a production sector with low to medium technologies; such technologies should be gradually abandoned since they usually provide employment for more workers than the high-tech sector.
At the same time, the high-tech sector itself, as the document notes, is quite inclusive, because it does not preclude the use of unskilled labor.
«There is a widespread perception, based largely on casual empiricism rather than careful empirical testing, that innovation-driven growth is not inclusive in that it tends to replace low-skilled jobs with jobs characterized by higher levels of qualification. Our findings decidedly reject this view. Indeed, our data suggest that more innovative firms hire a larger share of unskilled workers relative to non-innovative firms. And our econometric estimates indicate that the share of the workforce that is unskilled contributes more to employment growth for firms that innovate (in products and/or processes) than for non-innovators. Our finding that, on average, there is a selection bias that favors inclusive growth from innovation is comforting in view of the world-wide concerns about rising income inequalities and claims that the substantial benefits of economic growth have not been shared by the poor and unskilled.» The authors point out that corporations are particularly successful in that area, and corporate structure ensures broader inclusion.
Based on that, we can assume that inclusion implies the possibility of creating low-skill jobs for the poor and uneducated.
Recent IMF articles and statements are also permeated with the idea of inclusion. Christine Lagarde, Managing Director of the International Monetary Fund, in honor of March 8, called for inclusion of women.
«In recent years we have increased our emphasis on women’s empowerment precisely because, beyond the important ethical considerations, it also represents a missed opportunity in the pursuit of macroeconomic stability and inclusive growth—where the IMF’s expertise lies. Our research has shown, for example, that if women’s employment equaled men’s, economies would be more resilient and economic growth would be higher. Our new estimates show that, for the bottom half of countries in our sample in terms of gender inequality, closing the gender gap in employment could increase GDP by an average of 35 percent—of which 7–8 percentage points are productivity gains due to gender diversity,» Lagarde says.
The Fund’s analysts published an article in the latest issue of the corporate Finance and Development magazine in which they analyzed citizenship rights and came to the conclusion that for the sake of broader inclusion it’s important to replacejus sanguinis(the titular nation’s right of citizenship by blood), where it applies, with jus soli(the right to full citizenship by birth), as the latter is more inclusive.
«Our empirical results confirm that the difference in citizenship laws affects economic development, even after controlling for potential internal factors. We first compiled a new data set of citizenship laws and then estimated whether citizenship laws can explain in part the significant differences in income per capita across countries. We found that in developing economies, particularly when institutions are weak, citizenship laws matter: jus soli, which is more inclusive in nature and encourages assimilation and integration, has a statistically significant and positive impact on income levels. Per capita income in countries that switched to jus sanguinis was lower in 2014 (by about 46 percent) than it would have been if they had kept jus soli after independence, our results suggest,» wrote Patrick Amir Imam, IMF’s Resident Representative in Zimbabwe, and Kangni Kpodar, Deputy Division Chief, IMF Strategy and Policy.
It is clear that the authors wanted to emphasize the advantage of expanding the rights of people who do not belong to the main ethnic group for inclusive growth, and this seems to be true for these purposes. Only it is not quite clear (and it’s not explained in the article), why it’s 2014 that’s cited as an example, the question of why the countries have switched to jus sanguinisis not discussed (perhaps it is necessary at this stage of development), no reference has been made to the experience of the developed countries where jus soliis commonplace but inclusion does not always work, and quite often migrants influence the economy in a negative way for many generations.
What’s inclusive growth about?
World Bank opens cards (extended definition of WB)
IG focuses on economic growth which is a necessary and crucial condition for poverty reduction. IG adopts a long term perspective and is concerned with sustained growth.
For growth to be sustained in the long run, it must be broad-based across sectors. Issues of structural transformation for economic diversification therefore take a front stage.
It must also be inclusive of the large part of the country’s labor force, where inclusiveness refers to equality of opportunity in terms of access to markets, resources and unbiased regulatory environment for businesses and individuals.
IG focuses on both the pace and pattern of growth. How growth is generated is critical for accelerating poverty reduction, and any IG strategies must be tailored to country-specific circumstances.
IG focuses on productive employment rather than income redistribution. Hence the focus is not only on employment growth but also on productivity growth.
IG has not only the firm, but also the individual as the subject of analysis.
IG is in line with the absolute definition of pro-poor growth, not the relative one.
IG is not defined in terms of specific targets such as employment generation or income distribution.These are potential outcomes, not specific goals.
IG is typically fueled by market-driven sources of growth with the government playing a facilitating role.
Who will benefit
In the opinion of many economists, extensive growth opportunities for world capitalism have been exhausted, and opportunities for further expansion are not being associated with geographic expansion.
«Capitalism, once having come to a crisis, to the limits of its expansion, was able to overcome that barrier in the 70s. It absorbed the Soviet Union, it absorbed the socialist world, it invaded China, it invaded non-capitalist countries but now that limit is once again seen on the horizon,», says Oleg Komolov, Senior Researcher of the Institute of Economics, at a seminar of the S.Yu. Witte Institute of New Industrial Development.
Is it possible to deduce that inclusive growth is an attempt to push extensive growth and, roughly speaking, to include more people in the system? It is up to economists to decide, but some of the opinions on the matter tend to strip “inclusion” of its social care veil. There’s the idea that inclusion (not the name itself but the idea) was invented in the United States as early as the late 1970s as a response to the crisis and the abrupt drop in consumer demand.
«The first coping mechanism starting in the late 70s is women going into work. Young mothers went into work in huge numbers. We haven’t seen anything like it, a social revolution. They didn’t go to work because there were al those wonderful professional opportunities open to women. Some of them did but that was not the major reason why women went to work. They went to work mainly because they had to prop up family incomes that were dropping, because the men in the family and their wages were going nowhere,” says Robert Reich, a professor at the School of Public Policy at UC Berkeley, Secretary of Labor in the Bill Clinton administration, in an interview for the Inequality for Alldocumentary (directed by Jacob Kornbluth), “But there’s only a limit to how many young mothers can go into work. And so the second strategy used by the 1990s was that families, both men and women, worked longer hours. When I was Secretary of Labor I remember looking at the data and I was amazed, and I would go out in the field, I’d go to various cities, and I’d talk to people and people were working all hours, I mean second jobs, third jobs, overtime. If they were professionals, billable hours coming out of their ears. We were working 300 hours a year more than a typical European. We were working harder than the industrious, enormously industrious Japanese.»
The parallels with today’s ideas of inclusion are obvious. Inclusive growth (IG) implies employment growth, not income redistribution, say World Bank analysts. At the same time, IG is not defined in terms of employment generation or income distribution. These are potential outcomes, not specific goals. Furthermore, IG is fueled by market-driven sources of growth with the government playing a facilitating role.
The modern wave of inclusion mainly concerns developing economies (Russia is also considered to be one by the international institutes), in particular because they still have wide opportunities for corporate growth and for the exploitation of resources and people. For example, in one of the articles the World Bank analyzes how inclusion would increase and inequality would decline in Thailand if there were a law on the free sale of real estate. Actually, the most sensible point from the principles of inclusion goes like this: Growth «should be inclusive of the large part of the country’s labor force, where inclusiveness refers to equality of opportunity in terms of access to markets, resources and unbiased regulatory environment for businesses and individuals.»
«Inclusive capitalism» is an oxymoron because it’s greed, not inclusion, that is inherent in the capitalist system, says Vusi Gumede, an economics professor at the University of Southern Africa, Director of the African Institute of Management, Thabo Mbeki. In his opinion, even countries that could be said to have «inclusive capitalism» are actually pursuing inclusive development under social democracies.
«So, inclusive development is what we must push for. Inclusive development as Julius Nyerere (First President of Tanzania, one of the key African politicians in the period ofdecolonization. – Ed.)indicated in 1968 implies that “real development means growth of people. If real development is to take place the people have to be involved.” It is hard to imagine this under capitalism — it is hard to imagine inclusive capitalism. Development can be said to be inclusive if it properly involves those who must benefit from development, and those who must benefit from development should have their views heard about what kind of development they desire and how best to pursue it,» concludes Professor Gumede.
Publicist(The New York Times, The Wall Street Journal, The Spectator, et al, aquote fromTheSpectator, UK)
Almost ten years ago, a Princeton study found that racial bias had already crept in: Asians and whites had to score far higher on their SAT exams — 450 and 310 more points respectively, from a total of 1,600 — to have the same odds of being admitted into elite universities as black students. As a black American, I don’t use the term ‘racist’ lightly. But intentionally making it harder for people of a specific race to enter a certain sphere of society is the definition of racial discrimination. Many lessons have emerged from America’s adventures in diversity and inclusion.