Around the globe, leaders of governments and other stakeholder institutions enter 2017 facing a set of difficult and increasingly urgent questions:
- With fiscal space limited, interest rates near zero, and demographic trends unfavorable in many countries, does the world economy face a protracted period of relatively low growth? Will macroeconomics and demography determine the world economy's destiny for the foreseeable future?
- Can rising in-country inequality be satisfactorily redressed within the prevailing liberal international economic order? Can those who argue that modern capitalist economies face inherent limitations in this regard – that their internal "income distribution system" is broken and likely beyond repair – be proven wrong?
- As technological disruption accelerates in the Fourth Industrial Revolution, how can societies organize themselves better to respond to the potential employment and other distributional effects? Are expanded transfer payments the only or primary solution, or can market mechanisms be developed to widen social participation in new forms of economic value-creation?
These questions beg the more fundamental one of whether a secular correction is required in the existing economic growth model in order to counteract secular stagnation and dispersion (chronic low growth and rising inequality). Does the mental map of how policymakers conceptualize and enable national economic performance need to be redrawn? Is there a structural way, beyond the temporary monetary and fiscal measures of recent years, to cut the Gordian knot of slow growth and rising inequality, to turn the current vicious cycle of stagnation and dispersion into a virtuous one in which greater social inclusion and stronger and more sustainable growth reinforce each other?
This is precisely what government, business, and other leaders from every region have been calling for. Over the past several years, a worldwide consensus has emerged on the need for a more inclusive growth and development model; however, this consensus is mainly directional. Inclusive growth remains more a discussion topic than an action agenda. This Report seeks to help countries and the wider international community practice inclusive growth and development by offering a new policy framework and corresponding set of policy and performance indicators for this purpose.