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High Economic Growth Rates Alone Will Not Ensure elimination of Inequality

A brand new Porsche stops at a traffic signal and half a dozen beggars from the nearest slum welcome it with the dismal look of misery on their faces!!! This is the profound level of inequality we are trying to eliminate in our region South Africa. In literal terms Economic inequality (or "wealth and income differences") comprises all disparities in the distribution of economic assets and income. The term typically refers to inequality among individuals and groups within a society, but can also refer to inequality among countries. Economic Inequality generally refers to equality of outcome, and is related to the idea of equality of opportunity. Although there are equally compelling arguments in favor of higher economic growth rates for reducing inequalities but I would go with the stance that we need more equitable growth rather higher economic growth. South Asia progressed a bit in the factor of poverty alleviation, but it is alarming that inequality is increasing in the countries of the region. One can witness individual to individual, group to group, urban to rural, city to city and intra city, village to village and intra village, region to region and intra regional disparities and inequalities in all the South Asian countries. These inequalities are main source of political instability, ethic, moral, political, economic and administrative corruption, hindrance in good governance, above all breeding ground of violence and terrorism. It is a hard fact that in these countries there is a lot of gap between expectations of the people from the government and sources of the government which leads to a vacuum and this vacuum turns out explosion, disaster and devastation. Following figures indicate the dreadful condition of this region. The Income/Consumption Inequality by Quintile Groups indicates that in Bangladesh, 20% poorest share of income or consumption in 1981-82 was 6.6 and in 2004 that was decreased to 4.7% and the share of 20% richest in 1981-82, was 45.3% and in 2004, increased up to 52.0%. Bhutan the poorest share in 2004, 6.5% and richest 48.7%, in India the poorest share in 1990, 9.46% in 2004, a slight increase 9.52% and richest share in 1990, 37.8% and in 2004, a slight increase here as well 38.5%, in the Maldives the poorest in 1997, t0.0% and in 2004, 11.0% (the richest data is not available), in Nepal the poorest in 1995-96, 7.6% in 2003/04, decrease to 6.2% and the richest 1995-96, 44.9% in 2003/04, increase up to 53.4%, in Pakistan the poorest in 1988, 8.0% and in 2002, 7.0% the richest in 1988, 43.7% and in 2002 increased up to 47.6%, in Sri Lanka the poorest share of consumption in 1995-96, 7.2% and in 2002, 6.2% the riches in 1995-96, 44.4% and in 2002, 48.5% . Income inequality increased between 1990 and 2005 across the region. Increases in the absolute gaps between rich and poor and visible changes in consumption patterns and lifestyles undermine social cohesion. Although policy makers, government officials and financial advisors throughout the region have come up with strategically plans to escalate the economic growth the gap highlighting the inequalities has widened.

I will first discuss the example from my own country of Ayub Khan who is the first martial law administrator and is regarded as the most popular military dictator among the masses. One of the strongest political reason due which strong military ended is due to high difference in wealth distribution of rich and the poor. Despite of the fact that Pakistan's economic growth rate was very impressive in terms of number, it was the 2nd highest at that time after Japan. But the inequality between the different classes and segments was nowhere near remarkable. 66% of the country's assets was owned by only 26 families. Other 36% of Pakistan assets were owned by rest of Pakistani population. That is the reason when Ayub was celebrating his era as the Decade of Development (1958 to 1968) more hatred and rebellion among the masses was spreading against his regime. Mush raffs era, the last president of Pakistan also saw some extraordinary growth trends. Pakistan became one of the fastest growing economies of the world with its GDP reaching 7%. Half of the population got benefits from the flourishing economy while the other half suffered below poverty line. Service sector was thriving while the industrial sector was crumbling because of flawed policies and negligence of the government. Shining India was a political slogan referring to the overall feeling of economic optimism in India after plentiful rains in 2003 and the success of the Indian IT boom. The slogan was popularized by the then-ruling Bharatiya Janata Party (BJP) for the 2004 Indian general elections. Output was not very different for Vajpayees "shinning India". Big cities enjoyed the economic growth while small cities and villages did not develop significantly and the disparity stepped to the next level. Failure of the developing South Asia to eliminate inequality through speeding up the economic growth and not incorporating the trickle down effect of such benefits goes highly in favor of inclusive growth theory. Inclusive growth has been prompted by UNDP and the World Bank. Work on inclusive growth starts from the premise that societies based on equality tend to perform better in development. For instance, countries with more equal income distribution are likely to achieve higher rates of poverty reduction than very unequal countries. Inclusive growth is both an outcome and a process. On the one hand, it ensures that everyone can participate in the growth process, both in terms of decision-making for organizing the growth progression as well as in participating in the growth itself. On the other hand, it makes sure that everyone shares equitably the benefits of growth. Inclusive growth implies participation and benefit-sharing. Participation without benefit sharing will make growth unjust and sharing benefits without participation will make it a welfare outcome. Reducing inequalities is a major developmental challenge facing the developing Asia, in response to this challenge more and more Asian countries are adopting inclusive growth with its focus on creating equal opportunities and ensuring equal access to them as a goal of the development policy. How can a development strategy based on inclusive growth help developing Asia eradicate poverty and tackle inequality. An inclusive growth strategy would support high and sustainable growth, promote good government and strong institutions and facilitate domestic and regional integration. It would allow South Asian countries to move away from direct

poverty targeting and focus on identifying market and government failures that constrain inclusive growth. In encouraging sustainable growth, the role of government is to develop and maintain an enabling environment for business investment and private entrepreneurships. This means investing in infrastructure and human capital, building institutional capacity, adopting market friendly policies and maintaining the rule of law. Promoting social inclusion requires public intervention in three areas: investing in public services to enhance human capacity, ensuring policy and institutions advance economic and social justice, and providing safety nets to prevent extreme deprivation. I conclude my stance by emphasizing on the fact that to prevent any segment or classes of society from one rebellion, rage or hatred against government. It is vital for the policy makers of any country that they should make such policies that practically implements inclusive growth in the country.

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