Experience with emerging economies in recent years showing high growth rate, particularly India, Nigeria and Brazil where it is being retained in general at a level not less than 4 percent in any case giving boost to standard of living of the people and reducing intensity of poverty significantly, but with an adverse outcome reflected in widening gap between rich and poor. It is because of the fact that inclusive growth factor was ignored by economic managers of these countries.
Inclusive growth in IMF’s perspective implies to equal sharing of growth benefits, equal employment opportunities, improved access to education and health care facilities and most importantly easy access to financial services. Despite reduction in absolute poverty, trend of growing inequalities in developing and emerging economies vehemently call for immediate focus on inclusive growth strategy disseminated by IMF (International Monetary Fund).
Main stress should be on improving productivity level based on output per hour of work in all areas of economy to ensure wide spread increase in income and wealth needed to reduce inequality and poverty. In this regard certain prerequisites are to be met by devising policies and setting goals such as encourage foreign direct investment, develop needed infrastructure and improve business environment not only through friendly policies regarding tariffs and taxes at initial stage of doing business , but also needed security in the face of growing terrorist activities in developing counties. Project
Pakistan through China-Pakistan Economic Corridor (CPEC) venture is going ahead ambitiously in partnership with China, developing infrastructure with emphasis on network of roads and highways for shortening distance from adjoining countries and improving connectivity with surrounding countries for trade purposes. Yet apprehensions regarding security against terrorists exist. As such it is imperative that enabling environment free of all risks is created for increasing productivity in all sectors.
Human capital development is the second vital issue for achieving sustained economic growth rate as energetic and highly skilled work force is needed in the face of fast changing technologies in all areas of production. As such all developing economies including Pakistan need to enhance budgetary allocations for promoting quality education and health care substantially to match capabilities of their workforce with advanced and emerging economies.
In order to achieve Sustainable Development Goals (SDGs) in area of education side by side aiming for imparting quality education for youth, developing countries must go for ‘secondary education for all ‘ strategy. For that monetary incentives need to be given to compensate boys and girls from under privileged families going to schools at the cost of loss of their earnings from errant jobs as a child labor. In Pakistan, Sindh and Punjab governments had introduced stipend scheme of Rs200/- per month for students of low income families who show not less about than 80 percent attendance at school, which considerably enhanced the enrolment rate at secondary school level. Due to lack of proper supervision misuse of funds was reported at certain schools in Sind particularly in Karachi. This necessitates proper supervision and monitoring practices at all educational institutional level and at all tiers of Ministries of Education.
Besides that access to employment opportunities without gender disparity is another factors if genuinely pursued can boost up economic growth rate and reduce income inequalities. Globally women make up 40 percent of the labor force, but in quite a number of developing countries particularly Muslim majority countries of Africa and South East Asia and Middle East percentage of gainfully employed women is very low (less than 25 percent of total female work force).
Even in Pakistan as quoted in World Bank’s data for the year 2016 only 25 percent of workable female population is gainfully employed taking together urban and rural sectors. Reason beings particular household set up, rigid labor regulations and large disparities in education attainments. In this regard labor legislations are to be refined to create enabling environment for women hiring in all organizations. Establishment of day care centers for children of female employees is the utmost need for those live in nucleus family environment. Further women are treated discriminately in the matter of taxation. Instead of taxing incomes on individual basis they are treated as second earning member of the family, thus overall family income is heavily taxed.
According to findings of gender based research conducted by IMF if globally gender gap is reduced by 25 percent by the year 2025 would potentially create 100 million jobs for women. Regarding Islamic countries and those shy of providing equal employment opportunities to women like Saudi Arabia and Japan etc. IMF mission has suggested gender balance initiatives through wide spread remote work practices and encouraging female employment in retail business environment, which targets mostly female customers.
Financial inclusion is another globally focused area to achieve sustained accelerated economic growth rate resulting in lowering absolute poverty and improving livelihood through easy access to banking services among low income households through mobile banking and financial literacy programs for educating this particular segment of population regarding various banking services in vogue.
It is one area that is mobile banking and electronic banking where Pakistan has achieved significant progress. Mobile banking services have facilitated immediate transfer of funds even to remotest areas of the country. This particular initiative of Pakistan’s financial sector has facilitated expansion of micro-financing in rural and far flung areas of the country giving boost to establishment of micro and small businesses. This however requires stringent measures for regulation and supervision to rule out chances of any financial instability in the system.
Research undertaken at IMF for focus on better distribution policies to promote equity has emphasized reliance on social safety nets. This includes cash transfer to the poor and to compensate loss of government revenue on this count more progressive tax system free of all loopholes was has been suggested as ambiguities and anomalies in tax system benefit the rich class.
In case of Pakistan, under IMF supported funding program, which also address country’s balance of payment difficulties more than one million new recipients have been added to Benazir Income Support Program, the largest cash transfer program in the history of Pakistan to provide financial assistance to low income segment of population. Recently amount of stipend has been enhanced by 50 percent.
It is thus suggested that countries need to develop inclusive growth strategies for achieving sustained growth trend essential for improving standard of living of their people on continuous basis thus creating environment for reducing gap between rich and poor.