Structural change, inequality and inclusive growth: tensions and trade-offs (Paper)

Eduardo Ortiz-Juarez (King's College London )
J: Structural transformation
Session slots:

Short abstract:

Focused on developing countries that seek to end poverty and to pursue high growth, the panel will address the tension between structural change, associated with rising disparities between the rich and poor, and inclusive growth that is shared across society so that poverty reduction in maximised

Long abstract:

Most of the world's poor live in countries that have since the Cold War experienced rapid economic growth and substantial rises in average income per capita, unequivocal structural change of GDP, employment and exports away from agriculture, and an increase in income disparities between the richest and the poor. The UN goal of ending global poverty by 2030 will require that high growth rates are sustained and that growth is inclusive and shared across society. High and sustained growth is best driven by structural change. However, structural change is associated with rising disparities between the rich and poor. In contrast, inclusive growth is best achieved with steady or falling inequality to maximize poverty reduction. How to manage this tension or trade-off between structural change and inclusive growth is a crucial contemporary question for developing countries as they seek to end poverty as well as to pursue economic development. The proposed panel will address this tension through the following questions: What model of economic development would ensure rapid growth and structural change with an expanding share of income for the poor? How are governments to use policies to manage this tension? Where is political mass support for the processes that drive structural change to come from? Which economic and institutional arrangements mediate the trade-offs of structural transformations in the most equitable way?