Measuring Inclusive Growth Submitted by Bhupendra Badgaiyan Abstract The paper attempts to examine the conditions of the poor

r 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 "obb#$ouglas li%e function! It consists of two factors incorporating respectively the income and social opportunities effects of growth! The income factor ta%es in account the effect on average income of the poor relative to the poverty line while the social opportunity indicator trac%s 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! Achieving Inclusive growth is a concern of most of the developing countries and many of international development organi(ations! The concept includes focus on increasing income generation of the poor but also lays emphasis on improving there capacity largely in instrumental terms # so that overall living conditions can be improved! Thus in addition to capturing present consumption ) income in arriving at a social welfare measure the spectrum of opportunities available to different sections of the population are also important insofar as they represent the potential for future growth! Thus a concern for inclusive growth should not only *ust deal with increasing the income ) consumption of the poor but also on breadth and depth of opportunities available for future growth! To the extent that income of the poor rises in a given period and also that opportunities available to them increases the growth will be more inclusive! Thus a measure of inclusive growth should have components capturing both the income ) consumption as well as access to social opportunities! Thus as a general measure of inclusiveness of growth process one may define an Index of Inclusiveness &IoI' as follows + IoI , - . &yp)(' / &SoI' 0 1 23/34 and 23034 ########### &4'

5here - 62 is the normali(ation factor so that 23IoI3 4 and ( is the poverty line based on income ) consumption yp is the mean income ) consumption of people below poverty line SoI represents the Social 7pportunity Indicator and is defined as + SoI , &8I.9I.B:I' 4); ############&<'

Electronic copy available at: http://ssrn.com/abstract=1833602

where 8I 9I B:I represent respectively the comparative access ) achievements in social opportunities li%e education health and basic needs of people below the poverty line as a proportion of those above the poverty line! The focus here is on the degree of achievement of the poor as compared to those of the non#poor and not with general ine=uality measure! The proposed Index thus attempts to examine specifically the condition of the poor in both economic and non#economic spheres! To the extent that the income measure and the SoI in e=uation &4' move in the same direction over time let us say both improve over time the growth process is more inclusive! 7n the other hand if both decrease over time the growth process is not inclusive! 9owever in a situation where the two factors the income factor and the social opportunity factor move in opposite directions the net effect on social inclusion would depend on / and 0 and the si(e of each of the factors! Specifically the growth rate of IoI &a measure of inclusive growth' can be obtained by ta%ing log of e=uation &4' and then differentiating it i!e! Growth rate of IoI , / . growth rate of economic factor > 0 . growth rate of SoI ########### &;' The indices 8I 9I B:I used in e=uation &<' are defined as follows + 8I , ?&ep) enp . &sp) snp'@ A 9I , ?&lep) lenp' . &imrnp) imrp'@ 4)< B:I , ?&elp) elnp' . &dwtp) dwtnp' . &sanp)sannp'@ 4); where various measures used in &B' &C' &D' are defined as follows + ep , 8nrollment rate for children of the poor enp , 8nrollment rate for children of the non#poor sp , Eroportion of the poor passing secondary school snp , Eroportion of the non#poor passing secondary school lep , Fife expectancy at birth for the poor lenp , Fife expectancy at birth for the non#poor imrnp , Infant mortality rate for the poor imrp , Infant mortality rate for the non#poor elp , Eroportion of the poor household having regular electric supply elnp , Eroportion of the non#poor household having regular electric supply
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############ &B' ############ &C' ############ &D'

Electronic copy available at: http://ssrn.com/abstract=1833602

dwtp , Eroportion of the poor household having access to safe drin%ing water dwtnp , Eroportion of the non#poor household having access to safe drin%ing water sanp , Eroportion of the poor household having in#house sanitation facilities sannp ,Eroportion of the non#poor household having in#house sanitation facilities It may be mentioned that these measures are not exhaustive and it is assumed that they are non#(ero! "onclusion 8=uation &4' can be used to compute IoI over different periods of time and through this an indication of the inclusiveness of growth process could be ascertained! The difference in IoIs for two periods in a given society ) country would be a gauge for inclusive growth! Gurther many other process and outcome measures could be included in SoI to ma%e the measure more specific! HHHHHHHHHHHHHHHHHHHH Bhupendra Badgaiyan is an independent "onsultant! 9e has earlier wor%ed with I:$E and I:I"8G India! 8#mail bdbadgaiyanJyahoo!co!in Address 4;C A Eoc%et B Mayur Kihar Ehase II $elhi 4422L4 India HHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH