Measuring Inclusive Growth

Abstract

This study proposes an approach to measuring inclusive growth. It draws from the idea of a social opportunity function akin to a social welfare function. In this context, growth is defined as inclusive if it increases the social opportunity function, which depends on two factors: (i) average opportunities available to the population, and (ii) how opportunities are shared among the population. In part, the inclusiveness of growth can be captured by means of an opportunity curve, which has a one-to-one relationship with the social opportunity function. To complement the shortcoming of the opportunity curve particularly partial ranking, the study also develops the opportunity index to provide a complete ranking. These tools are applied to the Philippines to analyze the access to and equity of opportunities in education and health. More importantly, the empirical application illustrates how these tools can be useful in the dynamic analysis of inclusive growth, as they evaluate changes in opportunities over time.