inclusive growth criteria and indicators: an inclusive growth index

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  • Inclusive Growth Criteria and Indicators: An Inclusive Growth Index for Diagnosis of Country Progress

    Terry McKinleyNo. 14 | June 2010

    Inclusive Growth Criteria and Indicators: An Inclusive Growth Index for Diagnosis of Country Progress

    The paper constructs a composite inclusive growth index at the country level to measure contribution to inclusive growth. Indicators refer to (i) growth, productive employment, and economic infrastructure; (ii) income poverty and equity (including gender); (iii) human capability dimensions of inclusiveness; and (iv) social protection dimensions of inclusiveness. The methodology is then being applied in case study analysis for Bangladesh, Cambodia, India, Indonesia, the Philippines, and Uzbekistan. The paper is part of ADBs work on Operationalizing Inclusive Growth. Other studies are on (i) Concepts for Operationalizing Inclusive Growth, (ii) Operationalizing Inclusive Growth in Productive Sectors, and (iii) Operationalizing Inclusive Growth in Projects with Environment as Strategic Development Objective.

    About the Asian Development Bank

    ADBs vision is an Asia and Pacific region free of poverty. Its mission is to help its developing member countries substantially reduce poverty and improve the quality of life of their people. Despite the regions many successes, it remains home to two-thirds of the worlds poor: 1.8 billion people who live on less than $2 a day, with 903 million struggling on less than $1.25 a day. ADB is committed to reducing poverty through inclusive economic growth, environmentally sustainable growth, and regional integration.

    Based in Manila, ADB is owned by 67 members, including 48 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance.

    Asian Development Bank6 ADB Avenue, Mandaluyong City1550 Metro Manila, Philippineswww.adb.org/povertyISSN 2071-9450Publication Stock No. WPS102049 Printed in the Philippines

    ADB Sustainable Development

    Working Paper Series

  • ADB Sustainable Development Working Paper Series

    Inclusive Growth Criteria and Indicators: An Inclusive Growth Index for Diagnosis of Country Progress

    The author is the director of the Centre for Development Policy and Research at the School of Oriental and African Studies, London.

    Terry McKinley

    No. 14 | June 2010

  • Asian Development Bank 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines www.adb.org/ 2010 by Asian Development Bank June 2010 ISSN 2071-9450 Publication Stock No. WPS102049

    The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies of ADB, its Board of Governors, or the governments they represent.

    ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use.

    By making any designation of or reference to a particular territory or geographic area, or by using the term "country" in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area.

    This working paper series is maintained by the Regional and Sustainable Development Department. Other ADB working paper series are on economics, regional cooperation, and ADBI Working Paper Series. Further ADB publications can be found at ww.adb.org/Publications/. The purpose of the series is to disseminate the findings of work in progress to encourage the exchange of ideas. The emphasis is on getting findings out quickly even if the presentation of the work is less than fully polished.

  • Contents

    Abbreviations ............................................................................................................................... iv Acknowledgments......................................................................................................................... v Introduction ...................................................................................................................................1 Economic Growth, Productive Employment, and Economic Infrastructure...................................1

    Productive Employment.........................................................................................................2 Economic Infrastructure.........................................................................................................3 Indicator Proposals................................................................................................................4

    Addressing Income Poverty and General Equity ..........................................................................5 Income Poverty, Extreme and Moderate ...............................................................................5 Vertical and Horizontal Inequalities .......................................................................................6 Indicator Proposals................................................................................................................7 Incorporating Gender Equity into Inclusive Growth ...............................................................7 Indicator Proposals................................................................................................................7

    The Human Capabilities Dimension of Inclusiveness ...................................................................8 Indicator Proposals..............................................................................................................10

    The Social Protection Dimensions of Inclusiveness ...................................................................10 Inclusive GrowthPromoting Governance ..................................................................................11 Conclusion ..................................................................................................................................12

    Weighting Scheme ..............................................................................................................12 Scoring System ...................................................................................................................13

    ADB Assistance...................................................................................................................13 References..................................................................................................................................15 Appendixes 1: Bangladesh Case Study ..................................................................................................16 2: Cambodia Case Study.....................................................................................................19 3: India Case Study .............................................................................................................23 4: Indonesia Case Study .....................................................................................................27 5: The Philippines Case Study ............................................................................................30 6: Uzbekistan Case Study ...................................................................................................33

  • Abbreviations ADB Asian Development Bank ASEAN Association of Southeast Asian Nations GDP gross domestic product ILO International Labour Organization MDG Millennium Development Goal PPP purchasing power parity UNESCO United Nations Educational, Scientific and Cultural

    Organization UNICEF United Nations Children's Fund UNIDO United Nations Industrial Development Organization WHO World Health Organization Note: In this paper, "$" refers to US dollars.

  • Acknowledgments This paper is part of the work of the Asian Development Bank (ADB) on operationalizing inclusive growth. It was developed by a consulting team in close cooperation with staff from the Poverty Reduction, Gender, and Social Development Division of the Regional and Sustainable Development Department. Other studies include (i) Measuring and Monitoring Inclusive Growth: Multiple Definitions, Open Questions, and Some Constructive Proposals (Stephan Klasen), (ii) ADB's Contribution to Inclusive Growth in the Transport and Energy Sectors (Stein Hansen), (iii) Operationalizing Inclusive Growth in Agriculture and Small and Medium Enterprise Development Projects (Adrianus Rijk), and (iv) Operationalizing Inclusive Growth in Projects with Environment as Strategic Development Objective (Benoit Laplante). All of these papers recommend the same methodology for ADB to monitor its contributions to inclusive growth at the country and project levels. Inclusive growth is one of the three pillars of the long-term strategic framework 20082020 (Strategy 2020).

  • Inclusive Growth Criteria and Indicators: An Inclusive Growth Index for Diagnosis of Country Progress | 1

    1. Introduction 1. This paper constructs a composite inclusive growth index at the country level. For this purpose, it identifies suitable indicators in the areas of (i) growth, productive employment, and economic infrastructure; (ii) income poverty and equity, including gender equity; (iii) human capabilities; and (iv) social protection. It uses these indicators to suggest a diagnostic approach, based on weights and scores, which can help countries assess their progress in achieving inclusive growth. The composite index could also be used by the Asian Development Bank (ADB) as a starting point to diagnose how to maximize its support for a countrys inclusive growth objectives. The usefulness of this methodology is tested in case studies of Bangladesh, Cambodia, In