Major Constraints to Inclusive Growth

Topics: Poverty, Economic growth, Economics Pages: 7 (2674 words) Published: June 25, 2013
Inclusive Growth has been defined as, ‘growth that not only creates new economic opportunities, but also one that ensures equal access to the opportunities created for all segments of society, particularly for the poor’ (Ali and Son, 2007, p. 12), others have resolved that; growth is inclusive when it allows all members of a society to participate in and contribute to, and benefit from, the growth process on an equal basis regardless of their individual circumstances (Ali and Zhuang, 2007). This essay seeks to discuss the major constraints in promoting inclusive growth in Zambia. The key terms used in the essay shall be defined and the main concept which is inclusive growth will outlined, thereafter the constraints that hinder inclusive growth will be articulated and elaborated in detail and this will be accompanied by a conclusion. The following are the definitions of some of the key terms that stand out in this essay: A constraint refers to a limitation or restriction. Therefore, the constraints of inclusive growth are factors that limit inclusive growth ( Economic Growth may be defined as ‘a quantitative increase in the national production of goods and services over a given period, usually a year’ (Chigunta, 2012). Inclusive growth is more than broad-based growth. While economic growth (i.e., increased economic output or income) is a well-defined but narrow concept, inclusive growth, by implication, focuses on a subset of such growth episodes. Since not all growth episodes are inclusive, it is necessary to separate those that are from those that are not (Klasen, 2010). Therefore, it is necessary to determine what characterizes growth episodes that qualify as inclusive. Two options are possible. One focuses on process, in the sense that the actual growth included many people who participated in that growth (i.e., inclusive growth is based on inputs from a large number of people). In this context, inclusive growth is somewhat related to broad-based or labour-intensive growth. However, “inclusive” carries with it the notion of non-discrimination, a feature that is less clear with the other terms. Thus inclusive growth can be characterized as broad-based growth that includes non-discriminatory participation’ (ibid). ‘The second option focuses on outcomes of the growth process i.e., inclusive growth benefits many people (ibid). This option is closely related to the concept of pro-poor growth. ‘Growth is pro-poor if the incomes of poor people grow faster than those of the population as a whole. In other words, for growth to be pro-poor on this definition, income inequality must fall’ (DFID, 2004) this is its relative definition; ‘according to its weak but absolute definition, pro-poor growth refers to increased income for the poor, while its relative definition refers to growth that leads to disproportionate increases in incomes among the poor’ (Klasen, 2010). With that said; the inclusive growth definition is in line with the absolute definition of pro-poor growth, but not the relative definition. Under the absolute definition, growth is considered to be pro-poor as long as poor people benefit in absolute terms, as reflected in some agreed measure of poverty (Ravallion and Chen, 2003). In contrast, under the relative definition, growth is “pro-poor” if and only if the incomes of poor people grow faster than those of the population as a whole, i.e., inequality declines. However, while absolute pro-poor growth can be the result of direct income redistribution schemes, for growth to be inclusive, productivity must be improved and new employment opportunities created. In short, inclusive growth is about raising the pace of growth and enlarging the size of the economy, while levelling the playing field for investment and increasing productive employment opportunities. Despite positive, relatively broad-based and stable growth record in recent years and immense untapped potential in agriculture, mining and...
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