Shared prosperity characterized by four development goals: pro-poor growth, pro-poor development, inclusive growth, and inclusive development

Abstract

This paper is on shared prosperity and its measurement. Economic growth enhances total prosperity, increasing the economic pie in society, but the pie distribution determines how the population shares the pie. Based on a social welfare framework, we have developed an integrated methodology to evaluate growth and distribution simultaneously. Linking the two phenomena gives rise to four development goals: (i) pro-poor growth, (ii) inclusive growth, (iii) pro-poor development, and (iv) inclusive development. These four goals provide an alternative characterization of shared prosperity. The paper defines the four goals, providing a methodology to operationalize them using real-world data. The empirically measured goals inform at what rate the shared prosperity is enhancing in any country or the world. The methodology is applied globally to determine whether the growth and development have been pro-poor and inclusive in 173 countries over the two decades in the new millennium.

JEL classification: D63, D31, O11, O20, O47