Paper short abstract:

This paper explores advances made in low- and middle-income countries around economic transformation, social inclusivity and environmental sustainability, to understand synergies and trade-offs between domains and the state of progress since the turn of the century.

Paper long abstract:

Although policymakers often tout economic growth and transformation as a golden goose to promote prosperity and the goals of the Sustainable Development Agenda, some countries are seeing increases in inequality and stalling or reversing poverty reduction despite increases in labour productivity or GDP per capita. In addition, climate change may affect the pace of growth and other drivers of inclusion, but growth itself may proceed in ways unsustainable for planetary boundaries. The purpose of this analysis is to explore advances made in low- and middle-income countries around economic transformation, social inclusivity and environmental sustainability. These three pillars together are identified in this analysis as 'Nexus' outcomes.

The study draws on a range of country-level data across these three dimensions to examine synergies and trade-offs between domains and the state of progress since the turn of the century. It examines trends over two decades, correlations between Nexus domains, and undertakes a cluster analysis of countries over time to investigate the presence of Nexus outcomes. The analysis suggests that while labour productivity improvements and poverty reduction are closely correlated, these processes have typically not been environmentally sustainable when global impacts are taken into account. Environmental transformation and social inclusion have corresponded to better local environments, though, manifested for instance in better air quality. The paper concludes by presenting policy implications of the analysis, disaggregated by country income groups, with a view to more effectively joining up social, environmental, and economic agendas in low- and middle-income countries.