Ontario’s economic stagnation has only accelerated in the context of COVID-19. Consequently, new perspectives are emerging on the objectives of economic policy and the levers for achieving pro-growth objectives. Often, “inclusive growth” is touted as a possible alternative to existing paradigms.
In this article I will delve into the makeup of inclusive growth, and how public policymakers can help businesses and the local economy recover from the pandemic.
What Is Inclusive Growth?
By definition, inclusive growth is “economic growth that creates opportunities for all groups of the population and distributes the dividends of shared prosperity.” The basic idea is not to challenge economic growth as a policy priority but to ensure that market-driven policies ensure broad-based benefits from economic growth. Governments should also play an increasingly active role in shaping—rather than merely enabling—technological innovation and adoption, particularly in the areas of intangible capital.
International organizations and global leaders have shown considerable interest in the idea of inclusive growth:
- Valerie Cerra, Division Chief at the IMF’s Institute for Capacity Development, for instance, has called inclusive growth the “pivotal economic policy challenge of our time.”
- UN Secretary-General António Guterres has called on business leaders to support a push for inclusive growth.
- These calls have been echoed by former IMF director Christine Lagarde and the leaders of the G20.
- It has been put into practice by the OECD and regional organizations like the African Development Bank.
How Can Inclusive Growth Objectives Help More Ontarians Thrive?
This newfound emphasis on economic inclusion broadens the set of policies that are relevant to an economic growth strategy. Even though traditional economic growth levers are not obsolete, there is increased interest in new policy areas such as:
- Childcare
- Public transit
- Affordable housing
One approach to increasing productivity and economic growth is to complement the traditional policy levers for economic growth with a broader set of tools that reflect the unique features and characteristics of intangible capital as well as concerns about inclusivity.
It is not that there is no trade-off between efficiency and equity. New research indicates, however, that certain policies—such as affordable childcare—can contribute positively to both efficiency and equity goals.
Some policy areas increasingly considered to be part of a pro-growth strategy include competition law, labour market support, childcare, public transit, affordable housing (including inclusionary land-use policies), and education reform.
The Bottom Line
For economic growth and productivity to accelerate and break out of secular stagnation, a combination of traditional and newer growth-oriented policies will be necessary. This will require a combination of:
- Tax reform
- Regulatory reform
- Human capital investments (including university, college, and apprenticeship education)
- Support for R&D and innovation (including a role for government procurement)
- High-quality infrastructure (including traditional and digital)
- Well-designed social policies for citizens and business owners alike
While we are looking at things from a future lens, right now, the government is offering support to businesses during this difficult time, through their COVID-19 Economic Response Plan. These programs offer financial support, loans, access to credit, and enable businesses to avoid layoffs, and create new job opportunities in their local communities.
Just recently, Minister McNaughton put out an announcement that the province will propose legislation that, if passed, would assist with addressing the provincewide labour shortage by making it easier for internationally-trained immigrants to start careers in their designated fields. The proposed change will help remove many barriers faced by internationally-trained immigrants, including the requirement for Canadian work experience when applying to get licensed in certain regulated professions and trades, including law, accounting, architecture, engineering, and electrical work.
The government is moving in the right direction but I strongly believe it needs to keep the pace going and engage even more closely with the private sector. As a province, we need to take a broader view of the policies guiding Ontario’s post-COVID recovery plan if we are going to see meaningful change in 2022.
I know what it means to live a life that is full of ups and downs. I’ve been there. One moment you are on the top of the mountain and the next, at the bottom of a valley. What is important to know is nothing lasts forever. Things are always changing. To learn more about how you can make a difference in the success of your business and attract talent to your organization, visit my website today to discover the power of the Maestro Mindset.
