Promoting Inclusive Growth CHALLENGES and POLICIES
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Promoting Inclusive Growth CHALLENGES AND POLICIES Contents Executive summary Chapter 1. The political economy of inclusive growth by Mushtaq H. Khan Chapter 2. Finance, regulation and inclusive growth by Ross Levine Chapter 3. Individualised service provision and the new welfare state: Are there lessons from Northern Europe for developing countries? Promoting Inclusive by Charles Sabel Growth Chapter 4. Making green sources of growth more inclusive Public Disclosure Authorized by Sjak Smulders CHALLENGES AND POLICIES Chapter 5. Fiscal democracy or why sound fiscal policy, budget consolidation and inclusive growth require fewer, not more, attempts to control the future Edited by Luiz de Mello and Mark A. Dutz by C. Eugene Steuerle INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCT Chapter 6. Sequencing public interventions to support techno-entrepreneurship STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCL by Morris Teubal STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INC Chapter 7. Competitionand and Yevgeny innovation-driven Kuznetsov inclusive growth INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCT by INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUC Mark A. Dutz, Ioannis N. Kessides, Stephen D. O’Connell Growth Inclusive Promoting STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCL Chapter 8. How do you make growth more inclusive? STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INC by William R. White INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCT INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUC and Robert D. Willig STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCL STRUCTURALPublic Disclosure Authorized REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INC INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCT INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUC STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS Please cite this publication as: de Mello, L. and M. A. Dutz (eds.) (2012), OECD Publishing. POLICIES AND CHALLENGES http://dx.doi.org/10.1787/9789264168305-en Promoting Inclusive Growth: Challenges and Policies This work is published on the statistical databases. Visit information. OECD iLibrary www.oecd-ilibrary.org, which gathers all OECD books, periodicals and , , and do not hesitate to contact us for more Public Disclosure Authorized INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCL STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INC INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCT INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUC STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCL ISBN 978-92-64-16829-9 STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INC INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCT 11 2011 01 1 P INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH -:HSTCQE=V[]W^^: STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROW STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIV INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL REFORMS IN STRUCTURAL REFORMS INCLUSIVE GROWTH STRUCTURAL RE Public Disclosure Authorized Promoting Inclusive Growth CHALLENGES AND POLICIES Edited by Luiz de Mello and Mark A. Dutz This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation, The World Bank, its Board of Executive Directors, or of the governments they represent. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Please cite this publication as: de Mello, L. and M. A. Dutz (eds.) (2012), Promoting Inclusive Growth: Challenges and Policies, OECD Publishing. http://dx.doi.org/10.1787/9789264168305-en ISBN 978-92-64-16829-9 (print) ISBN 978-92-64-16830-5 (PDF) Corrigenda to OECD publications may be found on line at: www.oecd.org/publishing/corrigenda. © OECD and the International Bank for Reconstruction and Development/The World Bank, 2012 You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgement of OECD as source and copyright owner is given. All requests for public or commercial use and translation rights should be submitted to [email protected]. Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Center (CCC) at [email protected] or the Centre français d’exploitation du droit de copie (CFC) at [email protected]. CONTRIBUTORS – 3 Contributors Mark A. Dutz, the World Bank. Ioannis N. Kessides, the World Bank. Mushtaq H. Khan, Professor of Economics, School of Oriental and African Studies (SOAS), University of London. Yevgeny Kuznetsov, the World Bank. Ross Levine, James and Merryl Tisch Professor of Economics and Director, William R. Rhodes Center for International Economics and Finance at Brown University; member of the National Bureau of Economic Research and the Council on Foreign Relations. Stephen D. O’Connell, the Graduate Center at City University of New York. Charles Sabel, Columbia Law School. Sjak Smulders, Tilburg University. C. Eugene Steuerle, the Urban Institute. Morris Teubal, the Hebrew University of Jerusalem. William R. White, Chair of the Economic and Development Review Committee, OECD. Robert D. Willig, Professor of Economics and Public Affairs, Princeton University. PROMOTING INCLUSIVE GROWTH: CHALLENGES AND POLICIES – © OECD AND THE WORLD BANK 2012 FOREWORD – 5 Foreword The world economy is going through difficult times. The global crisis has bequeathed several countries a legacy of high unemployment, unsustainable public finances and lower potential output. It is therefore time to look ahead and ponder the challenges we will be facing in the years to come. This is what this volume is about. It puts together the proceedings of a conference co-hosted by the OECD and the World Bank that took place in Paris on 24-25 March 2011. The conference provided an opportunity for policymakers, academics, practitioners and members of civil society to discuss complex policy issues and look for creative, forward-looking ways of addressing them. The policy issues highlighted in this volume - financial development, social policies, innovation, regulation and political economy issues - are relevant to all countries, albeit at varying degrees, depending of their level of development and specific conditions. The key question is: how to design appropriate policies to strengthen growth and make it inclusive and sustainable over time? This volume puts structural reform at the core of the debate. Structural reforms include a variety of policy initiatives - in product, labour and financial markets, and in tax and benefit systems, among others - to enhance the productive capacity of our economies. Structural reforms can do much to unleash opportunities for investment and to allow countries to tap new sources of growth. They can also address issues of inclusiveness and social cohesion, ensuring that the benefits of sustained growth are shared equitably. Exploiting synergies among policy domains is also essential in this context. For example, innovation goes beyond R&D and calls for investment in human resources and appropriate competition policies to encourage entrepreneurship, among others. Innovation is also a key pillar of green growth, which is about greening old activities by harnessing knowledge and new technologies that can also create jobs and promote welfare in an environmentally sustainable manner. Pro-growth policies that remove impediments to job creation would contribute at the same time to fiscal consolidation by creating revenue for the budget. A strengthening of social PROMOTING INCLUSIVE GROWTH: CHALLENGES AND POLICIES – © OECD AND THE WORLD BANK 2012 6 – FOREWORD protection could positively affect people’s consumption-saving decisions and the balance of growth between domestic and external sources, depending on the initial position of the country and assumptions