Inclusive Growth: When May We Expect It? When May We Not?

Episodes of economic growth that lead to reductions in poverty and inequality are relatively rare in developing countries. In this paper, we examine the institutional foundations of such growth episodes. We argue that the institutional factors that lead to accelerations in economic growth will be different from those that lead to growth maintenance and avoidance of growth decline, and that the institutional preconditions for growth accelerations suggest that these growth episodes may not be inclusive. We present empirical evidence drawn from descriptive and cross-country econometric analyses that support these theoretical propositions. © 2014 Asian Development Bank and Asian Development Bank Institute.