The Political Economy Of Inclusive Growth A Review

In this paper, we review the role of the political economy in inclusive growth. We find that political economy forces on the demand and supply side have weakened redistribution over time and contributed to a new wave of populism. We document growing support for a rethink of the social contract to make growth more inclusive and discuss some of its broad elements.

This collection brings together internationally-renowned experts to offer a comprehensive review of how politics shapes inclusive development in the global south. Each aspect of development is covered: social, economic, environmental and cultural, with each substantive chapter offering a systematic review of the evidence in the relevant field.

‘This book is different from most other attempts to understand the politics of Indian economic development. Breaking down the last 65+ years of Indian development into several episodes of growth, it provides a rich set of insights into the political economy of the Indian development process and is a valuable addition to the literature.’ –Pranab Bardham, University of California, Berkeley, USA ‘Sustained economic growth in the world's largest democracy is critically important to human well-being, but the ups and downs of growth in India are not well-understood. This book provides a fresh and insightful approach to understanding what drives the starts of booms and the onset of slowdowns.’ –Lant Pritchett, Harvard University, USA ‘This is a little book with big arguments. The authors' explanation of the changing character of the deals done between political and business elites makes for the most original contribution to studies of the political economy of Indian development since Pranab Bardhan's seminal work of the early 1980s’ –John Harriss, Simon Fraser University, Vancouver, Canada This book moves beyond the usual economic analysis of the Indian growth story and provides a fresh perspective on the determinants of growth episodes in post-independence India, based on its political economy. Using a robust and novel technique, the authors identify four such episodes during this period. The first, running from the 1950s to 1992, was mostly characterized by economic stagnation, with a nascent recovery in the eighties. The second, covering the period 1993 to 2001, witnessed the first growth acceleration in the economy. A second acceleration ran from 2002 to 2010. The fourth and final episode started with the slowdown in 2010 and continues to this day. The book provides a theoretical framework that focuses on rent-structures, institutions and the polity, and demonstrates how changes in these can explain the four growth episodes. Kar and Sen argue that the transitions from one growth episode to another can be explained by the bi-directional relationship between growth outcomes and institutional arrangements, and by the manner in which institutional arrangements and their transitions are determined by the political bargains struck between the elite groups in Indian society.

Public provision of education has often been perceived as universal and egalitarian, but in reality it is not. Political pressure typically results in incidence bias in favor of the rich. The author argues that the bias in political influence resulting from extreme income inequalities is particularly likely to generate an incidence bias, which we call social exclusion. This may then lead to a feedback mechanism whereby inequality in the incidence of public spending on education breeds higher income inequality, thus generating multiple equilibria: with social exclusion and high inequality; and with social inclusion and relatively low inequality. The author also shows that the latter equilibrium leads to higher long-run growth than the former. An extension of the basic model reveals that spillover effects among members of social groups differentiated by race or ethnicity may reinforce the support for social exclusion.

This wide-ranging and innovative book synthesises the findings of a major international study of the political economy of poverty, equity, and growth. It is based primarily on analytical economic histories of 21 developing countries from 1950 to 1985, but also takes account of the wider literature on the subject. The authors take an ambitious interdisciplinary approach to identify patterns in the interplay of initial conditions, instiuttions, interests, and ideas which can help to explain the different growth and poverty alleviation outcomes in the Third World. Three different types of poverty are distinguished, based on their causes, and a more nebulous idea of equityin contrast to egalitarianismis shown to have influenced policy. Since growth is found to be the major means of alleviating mass structural poverty, much of the book is concerned with discovering explanations for policies which are found to be the most important influences on the proximate causes of growth. Lal and Mynt also consider the available evidence on the role of direct transferspublic and privatein alleviating destitution and conjunctural poverty. The Political Economy of Poverty, Equity, and Growth develops a novel framework for the comparative analysis of different growth outcomes. This framework distinguishes between the different relative factor endowments of land, labour, and capital, and between the different organizational structures of pesent versus plantation and mining economies. It also differentiates between the polities of 'autonomous' and 'factional' states in the countries studied, breaking the analysis down into further typological subdivisions and providing important new insights into the differing behaviour of economies that are rich in natural resources and those with abundant labour. These insights constitute a richer explanation for the divergent developmental outcomes in East Asia compared with Latin America and Africa. The evidence collated is used to argue for the continuing relevance of the classical liberal viewpoint on public policies for development, and to show why, even so, nationalist ideologies are likely to be adopted and lead to cycles of interventionism and liberalism. The evidence is also used to provide an explanation for the surprising current worldwide Age of Reform.

Economic policy, economic development, wealth, poverty, developed country, developing country, future - theoretics, economic growth, income distribution, ethics, sociological aspects, urbanization, modernization, dependence, basic needs, case studies, income redistribution in Central America, sugar production in Cuba. References.

Examines the widening economic inequality in the United States, China, and India, and what can be done to ameliorate this.

Inequality has drastically increased in many countries around the globe over the past three decades. The widening gap between the very rich and everyone else is often portrayed as an unexpected outcome or as the tradeoff we must accept to achieve economic growth. In this book, three International Monetary Fund economists show that this increase in inequality has in fact been a political choice—and explain what policies we should choose instead to achieve a more inclusive economy. Jonathan D. Ostry, Prakash Loungani, and Andrew Berg demonstrate that the extent of inequality depends on the policies governments choose—such as whether to let capital move unhindered across national boundaries, how much austerity to impose, and how much to deregulate markets. While these policies do often confer growth benefits, they have also been responsible for much of the increase in inequality. The book also shows that inequality leads to weaker economic performance and proposes alternative policies capable of delivering more inclusive growth. In addition to improving access to health care and quality education, they call for redistribution from the rich to the poor and present evidence showing that redistribution does not hurt growth. Accessible to scholars across disciplines as well as to students and policy makers, Confronting Inequality is a rigorous and empirically rich book that is crucial for a time when many fear a new Gilded Age.