Inequality hurts economic growth, finds OECD research

Inequality hurts economic growth, finds OECD research

09/12/2014 – Reducing income inequality would boost economic growth, according to new OECD analysis. This work finds that countries where income inequality is decreasing grow faster than those with rising inequality.

The single biggest impact on growth is the widening gap between the lower middle class and poor households compared to the rest of society. Education is the key: a lack of investment in education by the poor is the main factor behind inequality hurting growth.

“This compelling evidence proves that addressing high and growing inequality is critical to promote strong and sustained growth and needs to be at the centre of the policy debate,” said OECD Secretary-General Angel Gurría. “Countries that promote equal opportunity for all from an early age are those that will grow and prosper.”

Rising inequality is estimated to have knocked more than 10 percentage points off growth in Mexico and New Zealand over the past two decades up to the Great Recession. In Italy, the United Kingdom and the United States, the cumulative growth rate would have been six to nine percentage points higher had income disparities not widened, but also in Sweden, Finland and Norway, although from low levels. On the other hand, greater equality helped increase GDP per capita in Spain, France and Ireland prior to the crisis.

The paper finds new evidence that the main mechanism through which inequality affects growth is by undermining education opportunities for children from poor socio-economic backgrounds, lowering social mobility and hampering skills development.

People whose parents have low levels of education see their educational outcomes deteriorate as income inequality rises. By contrast, there is little or no effect on people with middle or high levels of parental educational background.

The impact of inequality on growth stems from the gap between the bottom 40 percent with the rest of society, not just the poorest 10 percent. Anti-poverty programmes will not be enough, says the OECD. Cash transfers and increasing access to public services, such as high-quality education, training and healthcare, are an essential social investment to create greater equality of opportunities in the long run.

The paper also finds no evidence that redistributive policies, such as taxes and social benefits, harm economic growth, provided these policies are well designed, targeted and implemented.

The working paper, Trends in income inequality and its impact on economic growth, is part of the OECD’s New Approaches to Economic Challenges Initiative, an Organisation-wide reflection on the roots and lessons to be learned from the global economic crisis, as well as an exercise to review and update its analytical frameworks.

Business Value Creation

Sustainable Value Creation is a new mode of business that addresses fundamental societal issues by identifying new, scalable sources of competitive advantage that generate measurable profit & community benefit.

Business at its best is organised around five implementation imperative for planning , managing & scaling a sustainable value creation strategy.

These imperatives are:

  • Recognise the opportunity: Analyse the root causes of existig core business challenges to uncover underlying societal problems, that if addressed, may lead to new source of competitive advantage.
  • Recalibrate your Radar : Pinpoint the optimal role the company can play in helping to address those issues by expanding internal & external networks to tap into trends. Improve the companys ability to screen ideas based on needs, uniqueness, strategic fit & core competencies.
  • Research, Develop , Repeat : Plan& manage sustainable value creation initiatives as R&D projects & subject them to the same rigor as any corporate initiative, accomadating an iterative development cycle & being prepared to learn from setbacks.
  • Rewire the Organisation : When bringing a project to scale, embed new governance structures, communications, incentives & metrics.
  • Reinforce the Value : CEOs will need to assume leadership to ensure the entire company remains focused & motivated & its stakeholders committed.

SAMPLE PROFILE OF ADVENTURE TERRAIN VENTURES

                                                ADVENTURE TERRAIN VENTURES(A  BUSINESS DEVELOPMENT CONSULTANCYfirm) since 2006.

 

 

 

 

                                  WE believe in providing quality  SERVICE – our basic value

 

                                    WE are open minded and not prejudiced- that makes us creative

 

                                        WE respect others freedom of choice- that makes us flexible

                                     

                                             Lastly being flexible adds to our adventurous streak

                              

                                                   WE help every business venture to cross the narrow

                                                                     TERRAINS

                                                      

                                                      THUS WE ARE NAMED 

                                                           

                                                           ADVENTURE  TERRAIN VENTURES.

              

                    LIST  OF   SERVICES  WE PROVIDE:

 

  • WE STRATEGIZE TO FIX PROBLEMS
  • WE PROVIDE PR CONSULTANCY AND  NEGOTIATION SERVICES
  • WE PROVIDE HELP TO REDUCE COMMUNICATION GAP WITHIN THE ORGANISATION
  • WE HELP ORGANISATIONS TO FIND THE HUMAN RESOURCE .  WE DON’T PROVIDE HEAD HUNTING SERVICE WE HELP THE MANAGEMENT TO FIND AND TRAIN THE RIGHT CANDIDATES. HELPING  THEM TO HONE THEIR SKILLS.

WE PROVIDE PROJECT OUTSOURCING SERVICES AS WELL ADDING TO ALL THE ABOVE SERVICES.

 

                     

                   We have provided our consultancy service as well as project specific service to different businesses like event management companies, construction companies