The paper attempts to examine the conditions of the poor during the process of growth, particularly when one aims at inclusive growth. Thus a measure to capture the inclusiveness of growth process has been suggested through a Cobb-Douglas like function. It consists of two factors incorporating respectively the income and social opportunities effects of growth. The income factor takes in account the effect on average income of the poor relative to the poverty line, while the social opportunity indicator tracks the social opportunities available to poor as compared to the non-poor. To capture these two effects a functional form for Index of Inclusion (IoI) is presented.

The potential role of social protection in the development process has received heightened recognition in recent years, yet making a strong investment case for social protection remains particularly challenging in many emerging and developing countries. This report challenges us to think deeply about the economic rationale for social protection investments through an inclusive development lens. It helps us understand the links between social protection, growth and inequality; how to measure those links empirically; social protection’s impact on inclusive growth; and how to build a more solid economic case for greater social protection investments.

This paper makes three basic contributions: a) review an already existing measure of 'inclusive growth' derived from a measure of inclusiveness (an increase in which is assumed to be associated with inclusive growth) and show that this is one among a class of an infinite number of possible measures; b) identify two drawbacks associated with the class of measures of 'inclusive growth' mentioned in a) and come up with a measure of inclusive growth which is not associated with one of these drawbacks; and c) propound a measure of inclusiveness of growth which allows the researcher the room to partition an income ordered population into blocks so that he/she can concentrate on inter-block inequality in growth rates of per capita income and neglect intra-block inequality (note that the formulation of this measure allows the researcher to partition the population into blocks in any which way he/she wants to) in growth rates of individual incomes.

We estimate a unified measure of inclusive growth for emerging markets by integrating their economic growth performance and income distribution outcomes, using data over three decades. Country distributions are calibrated by combining PPP GDP per capita and income distribution from survey data. We apply the microeconomic concept of a social mobility function at the macroeconomic level to measure inclusive growth that is closer to the absolute definition of pro-poor growth. This dynamic measure permits us to focus on inequality as well as distinguish between countries where per capita income growth was the same for the top and the bottom of the income pyramid, by accounting for the pace of growth. Our results indicate that macroeconomic stability, human capital, and structural changes are foundations for achieving inclusive growth. The role of globalization could also be positive with foreign direct investment and trade openess fostering greater inclusiveness, while financial deepening and technological change have no discernible effect.

While Asia’s growth record in recent decades is remarkable, it has been marred by rising inequalities. This book looks at recent trends of income and non-income inequalities in developing Asian countries, discusses their underlying driving forces, and examines key policy issues that need to be addressed to ensure that the benefits of growth will be more equitably shared in Asia. The book also presents a set of country studies that provide rich information on growth, poverty and inequality dynamics and the policy challenges that arise in marching toward inclusive growth.