Inclusive Growth

There is good reason to celebrate the achievements made in the area of poverty reduction over the last two decades. The first Millennium Development Goal was achieved five years ahead of schedule. An average growth in GDP of 5 % a year in developing countries is an achievement. But much more remains to be done.

Despite the growth achieved, I think all of us here share a concern about the significant increase in inequality in many developing countries. The World Bank has increased its efforts to address these issues, not least in the analytical work. There has been a move towards recognising not only the need for equality of opportunity, but also for including the perspective of equality of income and resources.

This year’s World Development Report has put jobs at centre stage on the development agenda. Once again you have provided evidence that increased employment opportunities for the poor are key to making growth more inclusive. The private sector is the most important driver of sustainable and inclusive growth and of job creation. But a comprehensive strategy is needed. We know from broad experience that better social protection systems have significance beyond their main purpose of redistribution – they can also promote growth.

What will it take to create more stories like that of Brazil, which has achieved a reduction of 5 percentage points in its Gini coefficient? At the World Bank’s IDA meeting in Abidjan last month, Brazil shared the lessons it has learned, and said that its success was only possible because redistribution was part of its policies. At the same World Bank meeting, the multi-country IDA working group on inclusive growth, chaired by our Danish colleagues, shared its findings. I took note of the working group’s first recommendation to the Bank: consider inclusive growth to be the overarching theme of IDA-17. I know we will return to this issue later today, so I will leave it at that for now.

Let me also mention that I believe the time is right for putting the issue of tax policy higher on the agenda. Improvement of tax systems and tax collection increases the growth potential of the economy and strengthens public finance, while at the same time potentially reducing inequality.

The eight countries represented here encourage the Bank to broaden its policy advice on redistribution, including social protection and taxation. The Bank should do this in order to address inequality and the inefficient use of resources within countries. We see it as imperative to eradicate poverty, and we see the Bank as an important actor in relation to the post-2015 development agenda and the promotion of inclusive growth.

I would like to add, speaking on behalf of Norway, that illicit financial flows – whether from corruption, organised crime, or tax evasion – increase inequality within countries and between countries. The fact that a number of actors facilitate such flows makes it a global issue, not something that can be blamed only on governance problems in poor countries.

My last point is also a point strongly advocated by this constituency. Increasing women’s access to the labour market correlates positively with greater economic equality overall. Last year’s greatly valued World Development Report on gender gave us all the evidence we need. Eradicating gender inequality will increase household income and reduce both poverty and inequality in a broader sense.

Dr Kim, you lit two guiding stars for the World Bank at the annual meeting in Tokyo: poverty eradication and shared prosperity. It would be very interesting to hear your views, in particular on the Bank’s interpretation of inclusive growth and how we can transform the Bank, also on this issue, from a “knowledge Bank” to a “solutions Bank”.

Thank you.