Trade and Development Report 2012

Inclusive Policies for Sustainable Growth

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In the context of the ongoing fallout from the global financial crisis, income distribution is back to the centre of economic analysis and policies. This publication explores the linkages between income distribution, growth and development. It analyzes the evolution of income inequality over the last decades in different regions and groups of countries. It also examines the explanations given for the widespread rise of inequality. The report questions the thesis that rising inequality is a necessary condition for successful development. Based on a comprehensive theory of economic policy elaborated in former reports, this book argues that only inclusive development policies create the conditions for sustainable and rapid growth.

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The role of fiscal policy in income distribution

Achieving a pattern of income distribution that policymakers deem desirable and that is acceptable to society as a whole has been an objective of fiscal policy in its own right. This is because it favours social cohesion and political stability and enables the entire society to participate in the overall growth process of the economy, even if the contribution of different groups of the population varies. But achieving a pattern of income distribution that boosts growth and employment creation should also be considered an intermediate objective. For both reasons, it is essential for developing countries to carefully consider the way in which fiscal policies influence income distribution as part of their development strategies.

English Spanish, French

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