Commenting on the report, Commissioner Hübner said: “We agreed in our discussions that growth should be inclusive to be sustainable and that growth strategies should be based on equal opportunities for all. Leadership and credible, pragmatic governments play an important role. No country has ever industrialised without urbanising. That is why urbanisation needs to be well managed. This is true not just for developing countries; it is also how we have designed our European Cohesion Policy. ”
Professor Spence added: “At a time when industrialised countries are experiencing a sharp slowdown in growth, many of the world's poorest countries have found growth to be elusive. It is our belief, however, that sustained, high growth can be repeated. By bringing together [in the Commission] the economists and the policy makers who have had to make the hard decisions for their economies, the Growth Report provides a decision-making framework for achieving inclusive, high growth.”
The report examines the economies of Botswana, Brazil, China, Hong Kong (China), Indonesia, Japan, Korea, Malaysia, Malta, Oman, Singapore, Taiwan (China) and Thailand. All have enjoyed high, sustained growth since World War II. All have some characteristics in common, such as their strategic integration in the world economy, mobility of resources, particularly labour, high savings and investment rates, and capable governments committed to growth.
The report then proposes ingredients for a growth strategy. It acknowledges that there are no 'silver bullets' to solve poverty in developing countries, and no single recipe, as the policy mix will depend on the specific situation in each country.
Among the ingredients which the report highlights are:
Leadership and governance: Leaders need to conduct policymaking in a patient, pragmatic and experimental way. They should be prepared to try and fail and try again. They should create conditions for a good, capable and motivated administration. They should ensure they have public support. The report insists that growth must be inclusive, to share the benefits of globalisation widely in each country.
Involvement in the world economy: Growth strategies that rely exclusively on domestic demand have limited time spans. Interaction with the global economy is crucial, as it allows fast-growing economies to import ideas, technologies and know-how from the rest of the world. They should also generate a strong export sector as a critical ingredient of high growth, especially in the early stages.
Need for investment: The report makes clear that growth requires high levels of investment. Overall, public and private sector investment rates of 25 percent of GDP or more are needed. Investment in infrastructure, education and health are crucial.
Environment and energy use: The report argues against the growing pattern of subsidising energy consumption in developing countries. Such money is often misspent and would be better invested in education and infrastructure. The report stresses that growth strategies should take account of the cost of pollution from the outset, even if they do not immediately adopt the tough environmental standards upheld in rich countries. It recommends more generous incentives for developing energy-efficient technologies, and the setting up of an international institution to monitor emissions cuts.
The urban-rural nexus: With half of the world’s population now living in cities, the report reminds us that no country has ever industrialised without also urbanising. Rather than seeing urbanisation as an unpleasant side-effect of growth, the report calls for greater financing of urban infrastructure with clear guidelines and appropriate incentives, well-regulated housing finance, sound planning principles, and a robust systems of property rights.
It also looks at other global trends such as: protectionist sentiment, the rise of India and China, rises in commodity prices, changing demographics, global imbalances and global governance.
The report recognises current food price rises as a threat to long-term growth, and recommends actions to combat them, including an end to export bans, more effective safety nets, redistribution mechanisms to protect those vulnerable to sudden shifts in prices, and boosting infrastructure investment for agriculture.
Finally, the report makes tailor-made recommendations for four sets of countries facing specific challenges: African countries, small states, resource-rich countries, and middle-income countries.
The Commission on Growth and Development is an independent body launched in April 2006. Its objective is to deepen the understanding of economic growth for development and poverty reduction. It aims to highlight policy actions which are likely to improve developing countries' growth prospects. The Commission comprises 21 members with policy and business experience, including 15 from developing countries, and two Nobel laureates, Professor Michael Spence and Professor Robert Solow. Commissioner Danuta Hübner, Lord John Browne, former Chief Executive Officer of British Petroleum, and Mrs Carin Jämtin, former Swedish Minister for International Development, represent Europe. The Commission is supported by the Governments of Australia, Sweden, the Netherlands, the United Kingdom, the William and Flora Hewlett Foundation, and the World Bank Group.
More information: http://www.growthcommission.org/