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Growth is Dead. Long Live Growth!

The quality of growth and why it matters

Key messages
Lawrence Haddad

AfD-JICA-IDS

Growth
Growth is Dead
as an end in itself

Long Live Growth


that drives development outcomes we
care about

We need growth that..


Lessens environmental tradeoffs
Promotes equity and inclusiveness
Does the prior two things and is less
susceptible to shocks

Key messages (1)


Growth as measured
by GNP per capita
improves some things
we care about, but
could do much more
(e.g. poverty,
malnutrition)
Has mixed effects on
other things (e.g.
employment)
Has many negative
effects on some things
we care about (e.g.
climate change)

Key messages (2)


Measuring development by GNP/capita will
not be easy to replace

We are used to ignoring GNP/capitas problems


There are strong vested interests in preserving it
It is easily understood by public
There is no consensus alternative, yet

Key Messages (3)


There are policy choices to be
made

Governance
Innovation
Measurement
Research

But does GNP/capita actually need


replacing?
Yes. Focusing on it will
mean:
we will not reduce poverty
quickly enough
we will not reduce
undernutrition quickly
enough
some types of employment
are bypassed
the growth in environmental
bads will not slow

Poverty
projections and
growth
Headcou
nt
poverty
ratio

High
inequality
Low
inequality

Poor trends: The pace of poverty reduction after the Millennium Development
Agenda.

Malnutrition Reduction
More responsive to increases in
Inclusive wealth index (IWI) than GDP

Haddad, Masset and Smith 2014

Employment: growth drives quantity


but not necessarily quality
Fixed effects
estimates
Unemployment

Is economic
growth
associated
with?

(n countries=113)

Employment in
Informal sector

not sig.

Vulnerability of
Unemployment*

not sig.

(n countries=34)

(n countries=95)

* self employment without


employees and those contributing
to family labour
Structural Transformation and the Quality of Growth and
Employment.
Xavier Cirera.

Growth, Carbon and Poverty


(Willenbockel review paper)

Grow now, decarbonise later. Not the way


to go.
Mitigation is cheaper in low income countries
Avoid lock in of high carbon growth
Remove worry of future import barriers on high
C products
BUT, requires investment from high income
low
growth
be
countries in capital,Can
skills
andcarbon
governance
in low
income countries poverty reducing?
Possible although not
inevitable
IEA modeling: 0.8% increase
in CO2 emissions of universal
basic energy access by 2030
over baseline of of 1.2 billion

Policy Implications (1)


Policymakers need to become
more discerning about growth. All
countries need to lead the way
Growth is not an end.
Growth is not a means to an end.
Growth is sometimes a mean to some
ends.

Improving the quality of growth


means increasing the likelihood that
growth promotes more of the things
we care about.

Policy Implications (2)


Choices can be made to make
it more likely we get the
growth we want, e.g.
Reduce inequality and strengthen
environmental resilience via
productive social protection
Invest in the first 1000 days of
life to break the cycle of
intergenerational poverty
For highly agricultural economics,
invest in agriculture to hasten the
demographic transition needed
to reap a demographic dividend
Take the governance of growth
seriously

Policy Implications (3)


Choices can be made to make
it more likely we get the
growth we want, e.g.
Introduce tax and investment
incentives to promote innovations
that minimise environmental
tradeoffs
Invest in capital, skills,
governance in areas that can
take advantage of solar and
hydro power
Develop new measures of growth,
ones that includes quality as well
as quantity: the SDGs are key
here

DEVELOPMEN
T
Thank You

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