Inclusive economic growth policies : myth vs reality

Inclusive growth is a key goal of the United Nations Agenda 2030 translating from its overarching aim of 'leaving no one behind'. The urgency of inclusive growth arises from the disturbing rising trend of inequalities worldwide over the past four decades since the policy paradigm of liberalisation, privatisation, stabilisation and globalisation became dominant. The growing inequality trend is threatening not only sustainability of growth, but also social and political stability. Therefore, policy makers are searching for alternative policies to reverse the inequality trend and to make growth more inclusive. This chapter will elaborate on macroeconomic policies for inclusive growth. In particular, it argues for consistent counter-cyclical fiscal policy, supportive monetary policy, inclusive financial policy and employment promoting exchange rate policy. Progressive taxation, public infrastructure investment, public social expenditure, and universal social protection play a critical role. Such a policy mix is unlikely to cause macroeconomic instability.