Giving people the chance to participate in the economy – to work hard –
is going to not only be good for the people
but it's also going to be good for the economy,
because it can draw on its entire productive potential.
On today's episode, we're looking at growth and inclusivity.
We know that growing economies is crucial for fighting poverty,
but how do we make sure certain people aren't left behind?
And why is inclusivity so important for sustainable growth?
Well, to get an expert answer on this and other questions,
we're in the chief economist's library here at the World Bank in Washington, D.C.,
with someone who is at the heart of the Bank's efforts to foster
sustainable growth and development, Pinelopi Goldberg.
I want to start by asking...
You know, we know that growth is essential to fighting poverty
but a lot of people feel like inclusivity – and fighting for inclusivity –
can be contradictory to fostering growth.
Can you explain that concern
and why you think they're not incompatible?
–First of all, we are not talking here about complete equality
where everyone has exactly the same share of the pie.
I think most reasonable people would not be in favor of such
a notion of equality, partly because
we do want to reward people who work harder or who are more competent.
So this view that growth and equality are not compatible
comes – from a certain extent – the view that if you don't embrace inequality,
then the incentive to work hard disappears.
So you have what economists call a moral hazard problem.
If you don't reward those who do better,
eventually, there will be no incentive to work hard or to do better.
When an economy grows – and especially when it grows fast –
usually we see big inequalities emerging. And to a certain extent, this is natural.
It would be a very strange coincidence if all parts of the economy
– if all sectors – grew at exactly the same rate.
So as a result of growth, we see many disparities within an economy.
The problem with this is that when these disparities become too large,
many people feel left out.
And if this persists and if these differences become very large,
then those who feel left behind, may try to block change
and they may try to stop growth.
–How do you go about fostering growth that is also inclusive?
What are some of these policies?
What are some of these efforts that institutions, governments can undertake?
So as a starter, I would say one needs to care about the issue.
In terms of concrete policies – how exactly we do it – it is going to depend
on the particular context in a particular country we focus on – on what the challenges are.
In some parts of the world, women are not integrated in the labor force.
In other parts of the world, this is not the main issue – women are well integrated –
but you may have very large income inequalities
or other groups of the population may be excluded.
You may have discrimination against ethnic minorities
or racial minorities or religious minorities.
–And you talked about how – it's not that growth and inclusivity are incompatible –
in fact, inclusivity might be necessary to continue growing –
to foster growth going forward.
–Giving people the chance – through a more equal society,
through a more inclusive society –
giving people the chance to participate in the economy, to work hard,
to to deploy their talents and their skills –
is going to not only be good for the people who participate,
but it's also going to be good for the economy because it can draw on its
entire productive potential.
–For the whole– –For the whole economy.
–Exactly. And what this comes down to is achieving growth by helping
economies achieve their full potential.
So it helps the entire population achieve its full potential.
It could be that some people do not want to work very hard, and that's their choice.
As long as it's their choice. That's fine.
But first, you should make sure that everyone has the same opportunity.
–I feel like we could talk about it sort of all day,
but I know you've got a lot going on, so we'll wrap up there.
But thank you so much for your time. –Thank you.
So we've learned that inclusive growth – that which reaches more people –
may just be the key to sustainable growth.
If you want more information on this, be sure to check out Penny's blog on World Bank.org.
Thank you so much for checking out our new series.
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as well as any questions that you have,
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