Shifting from quantity to quality: Growth with equality, efficiency, sustainability and dynamism
Conventional growth strategies have reduced poverty. People now have more access to basic services and more opportunities for mobility and participation. But there are still persistent unmet needs, widening inequalities, and new development challenges such as climate change, intensifying natural disaster and resource depletion. There is a search for growth strategies that better fit a changing economic, social and environmental reality. The 2012 United Nations Conference on Sustainable Development (Rio+20) emphasized the need for a balanced integration of the three dimensions of sustainable development. This publication responds to this call. It advocates a transformation in economic growth strategies and its underlying economic theories – a shift from a focus on quantity of economic growth, to quality of growth. Short-term growth strategies aimed at maximizing GDP growth has created a “vicious cycle” - growth driven by the exploitation of human and natural capital. Achieving sustainable development will depend on shifting to a "virtuous cycle" of investment in people and planet – where economic growth is a means of achieving shared prosperity and human well-being within planetary limits – rather than a goal in itself. This shift cannot be achieved without addressing the tradeoffs between the three dimensions of sustainable development and rethinking mainstream economic theories that have help to create these tradeoffs. Economic system change is needed to close the “time” and “price” gaps that favour short term investment in manufactured capital. Productivity strategies and concepts must be rethought, and social justice be brought into economic strategies – placing people at the centre of development. Quality of growth can be considered as having three dimensions – as does sustainable development – environmental, social and economic. At the same time, five key determinants of a good quality of growth are proposed: 1. Inclusiveness in relation to environmental, social and economic benefits; 2. Efficiency and productivity of use of natural, human and manufactured capital; 3. Structural transformation that promotes social and economic values; 4. Balanced investment in all forms of capital; and 5. Limits in the economic, social and environmental spheres that are defined by a credible science, a strong science-policy interface and stakeholder dialogue. Different kinds of institutional and policy support is needed for each of these key determinants. This publication provides a framework for quality of growth that can help policymakers and other stakeholders to assess and develop strategies for the system changes needed to shift to growth paths which are aligned with sustainable development. It can also support discussions on a transformative United Nations Development Agenda beyond 2015, as the period of the Millennium Development Goals comes to a close.