The case for inclusive growth

[Tom Goldenberg]

My colleagues recently released a report entitled "The case for inclusive growth." The report lays out the economic and moral case for inclusive growth, then delves into recommendations for public, private, and social sector actors. Here are my major takeaways from the report, centered on what inclusive growth is, whether it is possible, why it is important, and what should be done.
 
1. Inclusive growth - what is it?
 
The definition that resonated most with a panel of 50+ experts was "growth that seeks to broadly benefit all members of society." Inclusive growth is indicated by a range of factors, including individual well-being (e.g. economic, social, health), economic mobility, and income inequality. Here, I was reminded of organizations like DataHaven that track individual well-being across more than income via the Community Wellbeing Survey.
 
2. Is inclusive growth possible?
 
The answer is definitely yes. Research by the Organisation for Economic Co-operation and Development (OECD) shows that from 1980 to 2013, there are more than 250 cases of inclusive growth across 78 countries. Many of the countries that succeed in this area have better equality of opportunity, which can be driven by investments in economic mobility.
 
3. Why is inclusive growth important?
 
Income inequality has risen in the U.S. greatly over the last 30 years, and the U.S. is in last place among G7 countries when using the Gini coefficient measurement of inequality (Gini is a measurement from 0 to 1, with 1 being the highest inequality). In 2018, the U.S. had a Gini of 0.48, while Sweden was 54% of that at 0.26. The report highlights Inequality is a "threat to prosperity," since growing the economy depends on participation. The report highlights, "up to 40% of the GDP growth between 1960 and 2010 can be attributed to greater participation of women and people of color in the labor force through improved talent allocation."
 
4. So then what?
 
The report lays out a 3-step framework with examples from major U.S. cities, private industry, and civil society. It emphasizes that "inclusive growth involves both process and outcome," as populations increasingly seek more participatory forms of economic reform. Among many suggestions, one that stood out to me was on supporting entrepreneurship in underserved communities, a mission I help support through my involvement with Collab . "Improving business formation in underinvested communities can help support and create new business clusters for continued innovation while creating new centers of job creation."
 
For more information on the report you can visit https://www.mckinsey.com/industries/public-and-social-sector/our-insights/the-case-for-inclusive-growth