Never mind growth, Davos delegates – how about a World Development Forum?
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Version 0 of 1. This year’s gathering at Davos discussed inequality more than ever before. The latest Oxfam report has focused us all on one figure: 1% of the world’s population is soon to hold as much wealth as the remaining 99%. I’m not one of those criticising the Davos crowd for existing: “a club for the 1% to bond”, or “an annual shindig of the top 0.0001% (approximately)” according to the New Statesman). My critique is that they are talking about the wrong thing. They should be talking about sustainable development, not economic growth. Are they not the same? Well, no. Growth is sometimes good for some of the things we care about, such as poverty reduction, but not so good for others, for example, driving down infant malnutrition or generating good quality employment. And sometimes it is downright destructive, generating greenhouse gases that undermine growth in the future. In other words, the quality of growth matters as much as, if not more than, the quantity. We can forget about ending extreme poverty if we don’t tackle inequality A new book, Growth Is Dead, Long Live Growth: The Quality of Economic Growth and Why It Matters, the result of a two-year collaboration between the Institute of Development Studies, Agence Française de Développement (AFD) and the Japan International Cooperation Agency (Jica), shows how ineffectual growth can be in driving forward critical sustainable development outcomes. The book demonstrates that we can forget about ending extreme poverty by 2030, as the World Bank has suggested, unless inequality levels decline rapidly. It shows that infant malnutrition rates are much more responsive to improvements in inclusive wealth, a measure that goes beyond standard national income accounting, than they are to GNP per capita. And it illustrates that, while unemployment is responsive to growth, informal and vulnerable employment is not reduced by economic growth. Finally, a review of growth and carbon emissions concludes that the strategy of “grow now, green later” that many low- and middle-income countries are quite reasonably pursuing is neither in their interests nor in the interests of the richer countries. Green infrastructure can be most cheaply laid down in the lower-income countries and, coupled with abundant renewables such as solar and hydroelectricity, makes it very sensible for the richer countries to invest in capacity in lower-income countries and make governance of renewables easier by improving their own governance conduct in international forums. Equity is not just for idealists What needs to happen? Well, countries do have choices. Take fiscal policy, for instance: investing in productive safety nets would reduce want now and build human and environmental capital for the future. Lifecycle policy offers another example, because preventing malnutrition in the first 2,000 days of life has much higher benefit-cost ratios than expensive tertiary investments. Other choices include better governance of windfall revenues, investments in research and development that make green growth and poverty-reducing growth compatible, and measuring what we care about now, and not what we concentrated on 70 years ago. But change will not be easy. GNP has sat on the throne for a very long time. It is time to drag it off and replace it with a worldlier monarch There are many vested interests being served by focusing on growth at all costs. The book’s title reflects the traditional proclamation announcing the instant accession of a new monarch upon the death of their predecessor. We did this for a reason: GNP has sat on the throne for a very long time. It is time to drag it off and replace it with a worldlier monarch. Civil society movements such as action/2015 are vital to put pressure on the 0.0001% at Davos (and beyond) to pay attention to the quality of growth. But paying attention to the quality of growth is also in the interests of those who think they have the least reason to change. As a recent review by one of the editors (pdf) shows, while reducing inequality is vital as a driver of poverty-reducing growth, it is also vital as a spur for growth itself. But not everything is difficult. One thing the Davos leaders could do is rename their meetings. It would no longer be the World Economic Forum, but rather the World Development Forum. It would send a strong signal to the other 99.999%, which is that “we care about sustainable development”. Currently, growth is a means to some of those ends, some of the time. No more, no less. But it could be so much more: a powerful driver of sustainable development rather than an unreliable companion. The Davos club can play a big role in reframing growth. Our findings will help them do so. • Lawrence Haddad co-edited the book Growth Is Dead, Long Live Growth: The Quality of Economic Growth and Why It Matters with the JICA Research Institute vice-president, Hiroshi Kato, and senior economist at AFD, Nicolas Meisel. |