Inclusive growth: Why is it important for developing Asia?

5. Conclusions
This paper has discussed the new concept of inclusive growth that some multilateral development agencies have adopted as part of their tool kit. Starting from the definition of inclusive growth as growth that allows all members of a society to participate in, and contribute to, the growth process, I have argued that in a modern capitalist economy the necessary condition for a citizen to participate in society is that he/she has access to a meaningful job. Given this, the paper has offered an interpretation of inclusive growth as a clear policy objective, namely, the achievement of full employment, that is, a state of zero involuntary unemployment. This means that no one who is ready and willing to work for an appropriate wage is without a job. This also means zero involuntary part-time employment.
Developing Asia is home to about 500 million people unemployed and underemployed. This is a major cause of poverty. An economy running as close as possible to full employment can deliver a great deal of benefits, both economic and social. For this reason, being as close as possible to full employment should be an explicit objective of policy makers across developing Asia. I have argued, however, that in today’s world, characterized by globalization, rapid technological progress, and the opening of formerly Communist countries, plus China and India, to the global capitalist market, it will be very difficult to achieve full employment. Finally, I have proposed five policies to achieve full employment of the labor force: (i) redress the neglect of agriculture; (ii) undertake public investment in basic infrastructure (energy, transport, urban services) targeted to high-employment projects; (iii) Use of industrial policy, understood as a collaborative effort between public and private sectors, to accelerate industrialization, and structural transformation in general; (iv) Gear fiscal and monetary policies for the achievement of full employment; and (v) Implement Job Guarantee Programs.

1. “Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank, 2008–2020,” Asian Development Bank (2008).
2. Nanak Kakwani. and Ernesto Pernia, “What is Pro-Poor Growth?,” Asian Development Review 18, no. 1 (2000): 1-16. Kakwani and Pernia define pro-poor growth as “growth that leads to poverty reduction”.
3. Martin Ravallion and Shaohua Chen, “Measuring Pro-Poor Growth,” Economics Letters 78, no. 1(2003): 93-99. Ravallion and Chen define pro-poor growth as “growth that reduces poverty”.
4. Dani Rodrik, “Global Growth, Local Governance,” Ethos no. 9 (2011): 51-55.
5. Michael Spence, “The Impact of Globalization on Income and Employment: The Downside of Integrating Markets,” Foreign Affairs (2011): 28-36.
6. Ifzal Ali and Juzhong Zhuang, “Inclusive growth toward a prosperous Asia: Policy implications,” Asian Development Bank No. 97 (2007).
7. Ifzal Ali and Hyun H. Son, “Defining and measuring inclusive growth: application to the Philippines,” Asian Development Bank No. 28 (2007).
8. Ernesto Herrera, “More Than Common Economic Indicators” The Manila Times 18 March 2008. His comments refer to the high growth rate achieved by the country in 2007.
9. Jesus Felipe and Rana Hasan, Labor Markets in Asia: Issues and Perspectives (Basingstoke, UK: Palgrave Macmillan, 2006).
10. Jesus Felipe, Inclusive Growth, Full Employment, and Structural Change. Implications and Policies for Developing Asia (London: Anthem Press, 2010).
11. John Rawls, Theory of Justice (Cambridge, MA: Harvard University Press, 1971).
12. Amartya Sen, “Inequality, Unemployment and contemporary Europe,” International Labor Review 136, No.2 (1997): 155-172.
13. Amartya Sen, Development as Freedom (New York: Alfred A. Knopf, 1999).
14. Sen, Inequality, Unemployment and contemporary Europe, 12.
15. Robert Solow, “Mass Unemployment as a Social Problem,” In Kaushik Basu, Prasanta Pattanaik, and Kotaro Suzumura (eds), Choice, Welfare, and Development: A Festschrisft in honour of Amartya K. Sen (Oxford and New York: Claredendon Press), 313-322.
16. William Beveridge, Full Employment in a Free Society (London: Allen and Unwin, 1944).
17. Felipe and Hassan, Labor Markets in Asia: Issues and Perspectives, 9.
18. Felipe, Inclusive Growth, 10.
19. Paul Krugman, The Accidental Theorist (New York: Penguin Books, 1999).Alan Blinder, Hard Heads Soft Hearts (New York: Addison-Wesley, 1987).
20. Alan Blinder, Hard heads, Soft hearts(Reading:Addison-Wesley, 1987).
21.Dani Rodrik, “Globalisation and Labour, or: if Globalization is a Bowl of Cherries, why are there so many Glum Faces around the Table?,” In Richard Baldwin et al., (eds.), Market Integration, Regionalism and the Global Economy (New York: Cambridge University Press, 1999), 117-150.
22. Felipe, Inclusive Growth, 10.
23. John Maynard Keynes, The General Theory of Employment, Interest and Money (New York: St. Martin’s Press, 1936).
24. James Galbraith, “Dangerous Metaphor: The Fiction of the Labor Market,” Public Policy Brief No.36. 1997 The Jerome Levy Economics Institute of Bard College, New York.
25. Michal Kalecki, “The Difference Between Crucial Economic Problems of Developed and Underdeveloped Non-Socialist Economies,” In Osiatyński, Jerzy, ed. Collected Works of Michał Kalecki (Oxford: Clarendon Press, 1966, 1991).
26. Keynes, The General Theory of Employment, Interest and Money, 23.
27. Ricardo Hausmann, Dani Rodrik and Andres Velasco, “Growth Diagnostics” 2005, John F. Kennedy School of Government, Harvard University.
28. William Vickrey, “Today’s Task for Economists,” The American Economic Review 83, no.1 (1993):1–10.
29. William Vickrey, “A Trans-Keynesian manifesto (thoughts on assets based macroeconomics),” Journal of Post Keynesian Economics 19, no. 4 (1997): 495-510.
30. Michal Kalecki, “Political Aspects of Full Employment,” In Kalecki, M., Selected Essays on the Dynamics of the Capitalist Economy (Cambridge, UK: Cambridge University Press, 1943[1971]).
31. John Tatom,“Not All Deficits Are Created Equal, ” Financial Analysts Journal. 62, no.3(2006): 12–19.
32. Carl Shapiro and Joseph Stiglitz, “Equilibrium Unemployment as a Worker Discipline Device,” American Economic Review 74, no.3 (1984):433–44.
33. Kalecki, Political Aspects of Full Employment, 30.
34. Luigi Pasinetti, Structural Change and Economic Growth (Cambridge: Cambridge University Press, 1981).
35. Lance Taylor, “Pasinetti’s Processes,” Cambridge Journal of Economics 19, no. 5 (1995):697–713.
36. Felipe and Hasan, Labor Markets in Asia: Issues and Perspectives, 9.
37. Felipe, Inclusive Growth, 10.
38. Michal Kalecki, “Three Ways to Full Employment,” In Thomas Balogh, ed. The Economics of Full Employment (Oxford: Basil Blackwell, 1944).
39. Duncan Foley and Adalmir Marquetti, “Productivity, Employment and Growth in European Integration,” Metroeconomica 50, no. 3 (1999):277–300.
40. Ian Brown, Economic Change in South-East Asia, c.1830–1980 (Oxford: Oxford University Press, 1997).
41. Francisco Rodriguez, “Comment on Hausmann and Rodrik” Mimeograph. Department of Economics and Latin American Studies Program, Wesleyan University, 2005.
42. Yilmaz Akyüz and Charles Gore, “The Investment-Profits Nexus in East Asian Industrialization,” World Development 24, no.2 (1996): 461–70.
43. Arthur Lewis, “Economic Development with Unlimited Supplies of Labor,” The Manchester School 22, no.2 (1954): 139–91.
44. Jaime Ros, Development Theory and the Economics of Growth (Ann Arbor: University of Michigan Press, 2000).
45. Michal Kalecki, “Forms of Foreign Aid: An Economic Analysis,” In Jerzy Osiatyński, ed., Collected Works of Michał Kalecki. (Oxford: Clarendon Press, 1966).
46. Hyman Minsky, “The Role of Employment Policy,” In Margaret Gordon, ed., Poverty in America (San Francisco: Chandler Publishing Co., 1965).
47. Hyman Minsky, “Effects of Shifts of Aggregate Demand upon Income Distribution,” American Journal of Agricultural Economics 59, no.2 (1968):328–39.
48. Hyman Minsky, “The Strategy of Economic Policy and Income Distribution,” The Annals of the American Academy of Political and Social Science 409 (1973):92–101.
49. Ha-Joon Chang, Kicking Away the Ladder (London: Anthem Press, 2002).
50. Michael Schuman, The Miracle. The Epic Story of Asia’s Quest for Wealth (New York: HarperCollins, 2009).
51. Dani Rodrik, “Industrial Policy for the Twenty-First Century” John F. Kennedy School of Government, Harvard University, 2004.
52. Dani Rodrik, “Industrial Development: Stylized Facts and Policies” John F. Kennedy School of Government, Harvard University, 2006.
53. Felipe, Inclusive Growth, 10.
54. Joseph Stiglitz et al., Stability with Growth (New York: Oxford University Press, 2006).
55. John Kenneth Galbraith, The Good Society (Boston: Houghton Mifflin Co., 1996).
56. Ross Levine and Sara Zervos, “What we have learned about policy and growth from cross-country regressions?,” The American Economic Review 83, no. 2 (1993):426-430.
57. William Mitchell and Randall Wray, “In Defense of Employer of Last Resort: A Response to Malcolm Sawyer,” Journal of Economic Issues 39, no.1 (2005):235–45.

1. Amsden, Alice., Asia’s Next Giant: South Korea and Late Industrialization (New York: Oxford University Press, 1989).
2. Amsden, Alice., “Industrialization under WTO Law” UNCTAD, 2000
3. Amsden, Alice and Takashi Hikino, “The Bark Is Worse Than the Bite: New WTO Law and Late Industrialization, ” American Academy of Political and Social Science 570 (2000): 104–14
4. Kalecki, Michał., Essays in the Theory of Economic Fluctuations ( London: Allen and Unwin, 1939).
5. Pack, Howard and Kamal Sagi, “Is There a Case for Industrial Policy? A Critical Survey, ” World Bank Research Observer 21(2006): 267–97.
6. Sen, Amartya, “Inequality, Unemployment and contemporary Europe,” International Labor Review 136, No.2 (1997):155-172.
7. Sum, Andrew et al., 2011 (May). “The “Jobless and Wageless” recovery from the Great Recession of 2007-2009: The Magnitude and Sources of Economic Growth Through 2011 and Their Impacts on Workers, Profits, and Stocks Values.” Center for Labor Market Studies, Northeastern University.

Pages: 1 2 3 4