Economic growth is vital, but how does it actually happen? In this episode, we discuss the importance of growth, get into the nitty gritty of growth policy, and preview our series on growth policy.
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Today, the majority of the world’s poorest people are living in economies that have not achieved economic growth in the recent past.
Sustained and transformational economic development is the way out of this. And while this will no doubt be a tough challenge, there are plenty of examples from recent history of countries achieving sustained growth, and as a result, reducing poverty.
In our first series of Ideas in Development, we are focusing on growth policy, and we will be talking to policymakers from Latin America, Africa and Asia.
For this series, we are joined by co-host Kartik Akileswaran, the co-founder of growth teams. Kartik has spent the last nearly 15 years working on economic growth strategy across various organisations and roles. This includes work on the donor side of the table with the Millennium Challenge Corporation, and as an advisor with the Tony Blair Institute, where he sat within governments in Sierra Leone and Ethiopia. More recently, he has worked with Indian state governments on issues related to investment, urban economic development, and industrial parks.
Kartik is also the co-founder of Growth Teams, which is an organisation that advises governments on how to get stuff done for growth.
Economic growth matters
No country has high levels of GDP per capita and low levels of basic welfare. And no country has high levels of basic welfare at low levels of GDP per capita.
In recent decades, economic growth accelerations in various countries have yielded huge gains in welfare and living standards, far larger than those achieved by the most effective anti-poverty programmes.
These growth episodes, as is the case with all sustained rapid growth stories, have been driven by structural change – moving people from low- to high-productivity sectors of the economy, and doing so at scale. But how can policy make this happen?
The nuts and bolts of growth
Governments often struggle to sift through the policy advice they receive, figure out what makes sense in their specific context, translate it into concrete policy actions, then follow through on those priorities to get things done.
And that final step is key. The fact that the same policy can have hugely different effects across countries (e.g. Special Economic Zones) highlights the importance of how policy ideas are translated into the real world.
This is part of the policy cycle that has been neglected by existing players. Governments need support that helps them to take effective action, rather than more reports about the actions they could take. This translation requires state capability for implementation, something that many countries don’t have. In fact, more than 90% of countries have experienced either only a marginal improvement or actual deterioration in their state capability in the past 25 years.
How can you support growth?
Growth Teams helps developing country governments to problem solve for economic growth and structural transformation by supporting them to translate the research policy recommendations into actions on the ground.
For example, about 18 months ago, Growth Teams started working with the Rwanda Development Board, the lead investment agency in the country, forming a team to work step-by-step on promoting investment.This included:
- A research process with the team to create a compelling articulation for why a global BPO firm might consider setting up in Rwanda
- Taking this investment case and getting it in front of firms – the team built an investor pipeline of 80+ prospective investors, got in touch with those investors, and facilitated country visits for 10-12 of them.
- Throughout this back-and-forth with investors, there were many follow-up questions to address, data points to gather, and policies to clarify.
Through this work, RDB has attracted two new global firms to set up operations in Rwanda (with more expected soon), helping to create 6,000 good jobs, in the BPO sector by 2025. And these are high-quality jobs which pay $200-400 per month for entry-level positions, which is two-to-four times more than the prevailing wages from local employment.
These things sound simple, and in some ways they are, but the big difference is in actually getting them done.
In Rwanda, Growth Teams has already ventured into another sector, initiating work with RDB on agro-processing and food manufacturing, another part of Rwanda’s economy that holds promise for job creation and inclusive growth.
More widely, there is strong demand for Growth Team’s support from state and national governments, so they are actively expanding across Africa and India:
- In Tanzania – Growth Teams are supporting the government’s effort to articulate its national growth vision and prioritise high-potential sectors for economic transformation.
- In Malawi – Growth Teams is working with the national government to facilitate private investment and address key constraints to promote agricultural commercialisation, a critical driver of inclusive growth in the country.
- In Meghalaya – a state in Northeast India, Growth Teams will support a state-wide initiative on building government capability, with a specific focus on youth employment and job creation
Growth Teams is still a startup nonprofit, so a big part of their work still involves fundraising so they can work with more government partners.
The growth policy podcast series
So, with Kartik as our co-host, in this series of conversations on growth policy, we will cover how critical policies were conceived, designed, and implemented, when and where evidence informed their decisions, and how governments unlocked the constraints holding back high-potential sectors or the economy as a whole.
Put simply, evidence use, bottlenecks, and getting stuff done.
If this sounds like a series you’d be interested in, the first episode on Costa Rica is now live wherever you get your podcasts, or you can watch it on YouTube.
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