The macroeconomic foundations of inclusive middle-class growth

Growth that is shared—so-called inclusive growth—is now widely embraced as the central economic goal for developing countries. But definitions and empirical characterizations of inclusive growth vary widely. In this brief, inclusive growth is defined as growth that builds a middle class. Macroeconomic policies can shape the environment and incentives for inclusive growth in three important areas: fiscal discipline, the more rule-based the better; a “fair” fiscal policy with respect to revenues and expenditures; and a business-friendly exchange rate. Although these policies are not underlying causes of growth, they are conducive to growth. The analysis here relies heavily on the experiences of the mostly middle-income countries in Latin America.

Author: 
Birdsall, Nancy
Published date: 
2007
Publisher: 
International Food Policy Research Institute (IFPRI)
Series number: 
Special Edition
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