Inclusive Growth: Economics as if People Mattered

This article attempts to fill a gap in the existing literature by providing a holistic working definition of inclusive growth. We measure inclusive growth through a newly proposed index, named as the Inclusive Growth Index (IGI), based on 24 developmental indicator variables (categorized into expansion, sustainability, equity in access, and efficiency of economic activities and institutions) as its components. We have employed two kinds of weighting schemes in constructing the index: an ad hoc weighting scheme and a weighting scheme based on principal component analysis (PCA), performed differently on variables under each dimensions. This index helps one to rank countries or regions according to their respective inclusive growth achievements and to potentially track the time trend of a particular country. In our study, we have calculated IGI for 16 Asian countries and compared the IGI scores across the nations.