Private and public sectors must adopt policies that promote inclusive growth to reduce inequality and ensure the benefits of prosperity are shared.
Achieving inclusive growth is the pivotal economic policy challenge of our time. Despite significant economic and social progress over the 75 years since the end of the Second World War, too many people still suffer from poverty and lack of opportunity, and too many countries have a long way to go to meet their Sustainable Development Goals. Rapid climate change creates an escalating danger to sustaining growth. Inclusive growth is multidimensional and requires multidimensional policies.
To start with, macroeconomic stability is important. IMF research shows that economic crises and instability have scarring effects on both advanced and developing economies. In fact, the global financial crisis of a decade ago is likely contributing to the backlash against globalization and the declining trust in public institutions, especially in advanced countries. Crises lead to higher inequality and have played a major role in thwarting developing countries from catching up. So macroeconomic stability is a prerequisite to achieving sustained growth and inclusive prosperity.
Improving governance is another important way to ensure inclusive prosperity. This process will take different forms, depending on the country, entailing such things as reducing the opportunities for…