Inclusive Growth Analytics : Framework and Application

This paper argues that inclusive growth analytics has a distinct character focusing on both the pace and pattern of growth. Traditionally, applied country-specific poverty and growth analyses have been done separately. This paper describes the conceptual elements for an analytical strategy aimed to integrate these two strands of analyses, and to identify and prioritize country-specific constraints to sustained and inclusive growth. The authors apply the framework to the case of Zambia. The analysis suggests that income growth in Zambia is constrained by poor access to domestic and international markets, inputs, extension services, and information. High indirect costs - mostly attributable to infrastructure service-related inputs in production including energy, transport, telecom, water, but also insurance, marketing, and professional services - undermine Zambia's competitiveness, limit job creation, and therefore serve as a major constraint to inclusive growth. Improving the quality and access to secondary and tertiary education is essential if the poor are to benefit from future growth of the non-farm economy. Weak governance and, in particular, poor government effectiveness are factors behind the market coordination failures and the identified government failures, and are as such major obstacles to inclusive growth in Zambia.