My own sense of what might be new and significant starts with opening the Financial Times on Tuesday this week to see a full page advert entitled india!nclusive. ‘What’s new about that?’ I hear you say. But reading on it was clear that this was this a self-confident piece of self-promotion by an emerging market economy (note the CII hosted panel events at Davos on India, which will discuss, amongst other things, whether India can grow faster than China). It was also a powerful vision of India’s drive for inclusive growth. The strap line of the piece is ‘equality and success for all’, building on India’s demographic advantage and its strong domestic investment activity plus major changes in the composition of the rural economy and the potential of new technology. According to the piece, these elements are the basis of a ‘paradigm change in India’s (sic) growth trajectory’.
So why is this important for the mood music in Davos? Well, the concern not just with growth but with the equity of growth chimes directly with the analysis set out in the 2011 edition of the WEF Global Risks Report. Two risks that are considered especially significant given their high degrees of impact and interconnectedness are (i) Economic disparity and (ii) Global governance failures. Both are seen to influence the evolution of other global risks and inhibit capacity to respond effectively to them.
Globalisation, argues the report, has generated sustained economic growth for a generation. But the benefits are unevenly spread and although growth of the ‘new champions’ (that means economies like India) is rebalancing power between countries, there is evidence that economic disparity within countries is growing. The Report states ‘Issues of economic disparity and equity at both the national and the international levels are becoming increasingly important’, but at the same time there is growing divergence of opinion between countries on how to promote sustainable inclusive growth.
The Report sees overcoming past failures in global governance as essential in meeting these challenges. It points to the role of the G-20 but also remarks that its ‘efficiency in this regard has not been proven’. So it is of interest today to see that WEF leaders are putting together a white paper designed to help the G-20 group of nations piece together a jobs strategy. ODI colleagues have written extensively on the importance of policy instruments that deliver inclusive as well as sustained growth in low and middle-income countries and the significance of the G-20 as a convenor and facilitator in this endeavour. The challenge now is to find and deploy policies that work and to link these to global efforts to create more balanced growth and deliver on the promise of the MDGs. Being host to over 400 million of the poorest people on the planet, India’s effort to change its growth paradigm is going to be a critical test-case in the years to come.