Economic Growth

Economic growth increases state capacity and the supply of public goods
When economies grow, states can tax that revenue and gain the capacity and resources needed to provide the public goods and services that their citizens need, like healthcare, education, social protection and basic public services.
Further to benefits provided by the state, inclusive growth brings wider material gains. Growth creates wealth, some of which goes directly into the pockets of employers and workers, improving their wellbeing. As people earn higher incomes and spend more money, this enables people to exit poverty and gain improved living standards.
While we argue that economic growth should be a means rather than an end to development, we don’t want it to sound like we don’t support it. Looking globally, you find that most countries that have shown success in reducing poverty and increasing access to public goods have based that progress on strong economic growth.


Inclusive growth catalyses structural transformation
Economic growth can catalyse seismic social shifts by generating new economic opportunities and possibilities, new ways of thinking and new technologies. Growth can encourage the evolution of new forms of institutions and new social relations, too, as society adapts to the new material status quo.
We see this structural transformation occur more frequently when deals are open and the benefits of growth are widely distributed. Transformation requires the interaction of different capitalists with new technical abilities to exploit new areas and put labour to work on new things. Closed deals are likely to block that transformative process.
Structural transformation is important, because it can make the gains of growth more sustainable. This is because the productivity of capital increases with greater investment in technology and human capital. Economies move to produce higher value goods and services, rather than focusing on backbreaking low-value activities.
This is how historically countries have been able to move forwards and overcome poverty in a sustained way over time. Transformation shifts countries onto a different trajectory of productivity, with more and better jobs that create more value. We also see companies become more self-sufficient from a commercial point of view, rather than needing to rely on direct support from the state.