Theoretical Framework, Measurement And Strategies Of Inclusive Development

Inclusive development gives equitable and extensive opportunities to economic participants to improve productive employment, in order to maintain sustainable economy growth. This paper regards that inclusive development is not only a way of economy growth, but also long-term goals for society development. The definition of inclusive development contains three important factors:equal opportunity, productive employment and sustainable development. Equal opportunity is a stipulation that the welfare of people should be only correlated with his/her efforts, and not with his/her initial endowment. Productive employment refers to highly efficient and full employment. Sustainable development is a well-organized, environment-friendly and resource-saving development. The benign cycle of these three factors pillars the inclusive development. An "inclusive development triangle" is used in this paper to present the interaction of these three factors.Inclusive development is not only an economics notation, but a comprehensive measure concreted by a series of economics, social and environment considerations. Therefore, a multi-level and multi-factor index system is needed. Thus we apply the diagnostic model of economy development and decision tree model to indentify the possible variables which indicate the restrictions of inclusive development. Next, we input these variables into the index system of inclusive development. Then, factors analysis is used to calculate the inclusive development index.The inclusive development index for China economy results in a typically upwards trend with fluctuations during the year1978to2011. The fluctuation is mainly driven by fluctuations in the dimension of sustainable development. Status including change in production structure, excessive consumption of natural resources and environment, will bring on negative impact on sustainability of economy development and thus cause the fluctuations of index. Productive employment contributes most to inclusive development of China economy. Although steadily raised, the equal opportunity dimension shows a least growth rate. A measurement of inclusive development index covering31provinces indicates that significant difference exists among regions. And three factors of inclusive development contribute to each other during the process of economy development in theses provinces.A world-wide measurement of inclusive development index surveys a sample of42countries by2011. The top10countries with highest score are listed as follow: Luxembourger, Swiss, Belgium, Norway, Japan, Austria, Spain, Netherland, UK and Germany. China ranks the31st among42countries. According to the panel data of inclusive development index and gross domestic product (GDP) per capital, the inclusive development index improves as the GDP per capital elevates, but follow a margin decreasing rule.The interaction of three factors of inclusive development can be placed in the angles of a triangle linked by double arrows clockwise and counter-clockwise. For low-income developing countries, the economy development is the only way to lift them from poverty. Many of them exploit the natural resources to increase job opportunity and resident’s income. The increase of residents’income pushes the economy by expansion of consumption. The development pattern above can be represented as a counter-clockwise cycle of "development-employment-opportunity-development". In this stage, development is at the cost of sacrificing the natural resources and characterized by labor-intensive industries. The unequal distribution of income is the main disturbance term of economy development stability, and thus can be categorized as low level inclusive development. After the initial economic take-off, the developing countries undergo difficult bottleneck such as excessive consumption of natural resources and environment, shrinking profit margin of primary products, Loss of competitive advantage and unequal distribution of income. The economy is turning to vicious cycle that "unsustainable growth-inefficient production-unequal opportunities-unsustainable growth". To break through the bottleneck, developing countries needs to adopt inclusive development strategy to convert the economy to the benign cycle mentioned above. Evidences from different countries shows that the development path of inclusive development include main four stages, the low inclusive-low growth rate-low income phase, the low inclusive-high growth rate-medium low income phase, the high inclusive-high growth rate-medium high income phase, and the high inclusive-low growth rate-high income phase.China is at the juncture of shifting from the second stage to the third stage of inclusive development. Improving the inclusive level by active strategic arrangement is the necessary condition to economy development. Although there is a long way to go before realizing inclusive development, short-term practical policies are called on to facilitate this goal.First, China should firmly holds policies on equal education and unifying resources allocation of urban-rural education resources, and implement equal opportunity employment while against any kinds of work discriminations. This helps reduces the phenomena that offspring from some disadvantaged groups are not equally accessed to education opportunities. It is beneficial for the reform that enforces equal opportunity to covert demographic dividend to intellectual dividend, and lays the foundation of equal income distribution and harmony society.Secondly, the core of improving productive employment is raising productivity. While China is undergoing the labor urbanization, we should pay attention to improve the quality and social security of our workers, provide skill training to workers. As the slowdown of population growth and urbanization, productivity of labor will be the main powerhouse of economy development. Therefore, China should encourage the technical innovation and rate of capital utilization to improve the labor productivity, and thus grasps the opportunity during adjustment of industrial structure.Finally, we should firmly believe that innovation strategy is the critical point of sustainable economy development. Nowadays, there is a certain gap of high-tech product between China and developed countries. Accelerate the transform towards capital intensive product helps China cultivate new point of growth. Improve operation environment, increase scientific research, support the development of small and medium-sized enterprises, expand the domestic consumption market and enhance the innovation ability all contribute the industry update and sustainable development of resources and environment.