Inclusive growth, full employment and structural change

World poverty is closely related to unemployment and under employment. This is especially the case in developing Asia, where about 500 million unemployed and underemployed people have to cope without significant government wel fare support. Recently, institutions such as the World Bank and the Asian Development Bank have started using the term inclusive growth in setting their policy agendas. In this book, Jesus Felipe argues that if policy makers across developing Asia care about inclusive growth defined as growth with equal opportunities, then achieving true full employment should become the paramount objective of Asian governments.

The best strategy to reduce poverty in developing Asia is to introduce a set of policies that will generate full employment. While a number of policy initiatives will be useful-particularly those that target productiv ity improvements in agriculture and stimulate investment in industry, and those that condition the broader macroeconomic environment (monetary, fiscal, and exchange rate policies)-the key is to coordinate their imple mentation to ensure that they pull the economy toward full employment.

This policy mix is important because ongoing structural change, the key to development, makes the attainment of full employment a moving target and governments are continually confronted with political and eco nomic choices that at times seem to be conflicting. But at all times, the policy process must aim at ensuring that there are enough jobs available to meet the needs of the labor force.

Agriculture remains the largest employer in many Asian countries, including the two largest developing economies, i.e., India and the Peo ple's Republic of China. It is thus clear that any viable development plan must place special focus on agriculture. Any such plan has to involve investment initiatives that improve agricultural productivity and alterna tive job creation strategies that provide opportunities for rural workers displaced by technological advances. These job creation initiatives must take into account the effects of structural change if full employment is to be achieved. Localized job creation programs will also be necessary to ensure that urban structures are not flooded with workers displaced from the modernized agriculture sector.