A Quest for Quality

High growth alone will not improve social conditions

Montfort Mlachila, René Tapsoba, and Sampawende Tapsoba

TRANSLATING strong growth into better living conditions is the holy grail for policymakers in developing economies, many of which have experienced strong economic growth in the past decade. But poverty, inequality, and unemployment indicators remain stubbornly high in many countries. The quality of growth is as important as its level –may-be even more important. High growth alone will not improve social outcomes.

There is increasing agreement that inclusive growth – that bene-fits all members of the society — is an important element of so-called good growth. The common denominator of inclusive growth is its quality, which can mean different things to different people. Like beauty, quality growth is in the eye of the beholder.

Recent economic and political history has shown that high growth does not necessarily lead to better social outcomes. Likewise, good social outcomes without sound growth are unsus-tainable (Berg, ostry, and Zettlm-eyer, 2012). Good growth in deve-loping economies must promote the ultimate goals of any develo-pment policy — better living standards, lower poverty, and reduced inequality.

A mushrooming literatute shows that countries with high, durable, and socially friendly growth are more likely to improve livinh standards and reduce poverty faster (see, for example, Dollar and Kraay, 2002; Sala-i-Martin, 2006). Good growth should, therefore, ensure inclusion of segments of the population that are on the fringes of the growth process. Redistribution of the fruits of growth is less important than ensuring that growth is broad based and leads to better social outcomes.

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