By Jia Jinjing and Lin Xuefen Source: CGTN Published: 2018-7-28
For a long time, the traditional pattern of development has significantly promoted economic growth and globalization. On the other hand, it has also faced many challenges.
The most important issues that we are facing today are income inequality and the wealth gap, as well as severe environmental pollution and waste of resources. In all cases, there is likely to be misallocation of resources caused by unbalanced, extensive economic growth.
The latest development model known as “inclusive growth” is a practical solution to these problems. The goal of such growth is to strike a balance between economic and sustainable development. In other words, instead of only focusing on the economic outcomes as in traditional models, inclusive growth focuses more on equity.
The interests of all parties are closely interconnected after the tidal wave of globalization swept the world. Only inclusive growth can address the root of global challenges and maintain the international order.
The prerequisite for such growth is to open markets around the world, as promoting global competition and innovation is crucial to our prosperity.
Also, it will boost development and global governance by turning the world into a community of interests and responsibilities. In short, inclusive growth will be focused more on the relationship between man and man, or man and nature, instead of capital growth and accumulation.
Nowadays, without the new breakthroughs that come from technological innovation, the economy is recovering slowly. In the meantime, it still faces many uncertainties such as the rise of protectionism, populism and geopolitical conflict. Inclusive growth perfectly facilitates the stability and development of the global economy.
On the one hand, inclusive growth will add new impetus and vitality, providing new room for economic growth. Rapid development of technologies that facilitate inclusivity has led to the proliferation of e-commerce, mobile Internet, and intelligent manufacturing. Moreover, energy saving measures and reduction of carbon emissions are expected to become the steam engine of the 4th Industrial Revolution.
Still, inclusive growth will continuously reduce the remaining barriers to the free flow of capital, goods, services, and technology among countries and regional blocs, which in the end will provide an environment conducive to economic recovery.
For the countries in Africa with the lowest economic output, their economies have been plagued by low productivity and chronic inefficiency. Globalization and technologies such as the Internet have not brought substantial economic growth and social progress, instead severely marginalizing them on the world market.
However, inclusive growth could meet their needs by promoting modernization and industrialization. The development model can help marginalized African countries upgrade its industrial infrastructure and improve conditions for trade.
More importantly, infrastructure aid has helped people in Africa deal with poverty, hunger, and disease.
Organizations such as BRICS are responsible for this contribution to the economic development of developing economies. The BRICS represent around 40 percent of the world's economy, compared with only 12 percent a decade ago. Its contribution to the global economic growth has surpassed 50 percent.
In addition, it is deeply involved in cooperating with other emerging economies. Evidently, the emerging market economies and developing countries are playing a much more important role in contemporary economic growth, leading the way in inclusive growth.
Emerging economies are not limited to supporting the framework for multilateral cooperation, but also promoting internal reform, striving for more than economic order.
Its active cooperation on many important issues in the United Nations and the G20 framework has positively impacted global economic growth, free trade and cooperation in financial supervision.
Although there are challenges for emerging economies to promote inclusive growth worldwide – such as a turbulent external market caused by the "normalized" monetary policy and higher interest rates, and geopolitical tensions – they have already become the key in establishing a new type of globalization.
The relations in emerging economies present a great example of cooperation between countries with different social systems based on the principles of equality and mutual benefit. It will bring to the world a better and healthy balance, along with a new source of economic strength.
Jia Jinjing, chief fellow, and Lin Xuefen, assistant fellow, are both from Chongyang Institute for Financial Studies under Renmin University of China.