Growth or Inclusion?

• Author: Jonathan D. Ostry
• Pages: 42-45

With the right policies, countries can pursue both objectives

Jonathan D. Ostry

Growth or

Inclusion?

With the global economy enjoying

its broadest synchronized e xpan-

sion since 2010, and further gains

forecast for this yea r and next, it is

tempting to conclude that economic dangers have

receded and that a new norma l of healthy growth

is upon us. Of course, economists a lways see risks

on the horizon, be they the buildup of nancia l

vulnerabilities, t rade protectionism, or various

geopolitical cal amities. One that is persistently in

their sights is the risk t hat policymakers will grow

complacent and fail to press on with the reform s

needed to lay a foundation for sustained grow th.

Economists have long believed that i mproving

the supply side of the economy—reducing barri-

ers to entry in product markets a nd making labor

markets more exible are notable exa mples—is the

key to sustaining growth. at is why there is so

much emphasis in IMF (and other) policy advice on

removing impediments to the movement of goods

and capital across borders and improving ec onomic

eciency through libera lization and deregu lation.

42 FINANCE & DEVELOPMENT | June 2018