A Quality of Growth Index for Developing Countries: A Proposal

Abstract

This paper proposes a new quality of growth index (QGI) for developing countries. The index encompasses both the intrinsic nature and social dimensions of growth, and is computed for over 90 countries for the period 1990-2011. The approach is premised on the fact that not all growth is created equal in terms of social outcomes, and that it does matter how one reaches from one level of income to another for various theoretical and empirical reasons. The paper finds that the quality of growth has been improving in the vast majority of developing countries over the past two decades, although the rate of convergence is relatively slow. At the same time, there are considerable crosscountry variations across income levels and regions. Finally, emprirical investigations point to the fact that main factors of the quality of growth are political stability, public pro-poor spending, macroeconomic stability, financial development, institutional quality and external factors such as FDI.

Welfare spending and quality of growth in developing countries: A note on evidence from Hopefuls, Contenders and Best Performers

“…The most notable to the best of our knowledge is from Anand et al (2013) and Mlachila et al (2014). The former which accounts for inequality is drawn from the literature documenting the imperative for inclusive growth to mitigate poverty in a sustainable manner (Kraay, 2004;Berg et al, 2011ab).…”

“…The latter or Mlachila et al (2014) have drawn on the former (Anand et al, 2013) as well as a combination of previous definitions, concepts and measurements of pro-poor growth to provide a new measurement called the Quality of Growth Index (QGI). The new index which builds on Ianchovichina and Gable (2012) and the Commission on Growth and Development (2008) is based on a current stream in the literature providing evidence on 'immiserizing growth' that is associated with growing unemployment, poverty and inequality in regions like sub-Saharan Africa (SSA) (Ola-David & Oyelaran-Oyeyinka, 2014;Dollar et 4 al., 2013;Dollar & Kraay, 2002;Martinez & Mlachila, 2013).…”

“…Hence, some important dimensions critical for 'growth quality' include increasing productivity, strength, sustainability, stability, poverty mitigation and better living standards. The present study focuses on extending Mlachila et al (2014) to integrate social dimensions in the intrinsic measurement of growth.…”

“…But before we show how Mlachila et al (2014) is relevant to the present line of inquiry, it is first of all imperative to (i) provide a linkage between stylized facts on the relationship between Sub-Saharan Africa's extreme poverty tragedy and the QGI and (ii) discuss why social welfare in health and education are reducing the QGI in SSA. Given that growth in the sub-continent has fundamentally been driven by resource-rich countries (Asongu, 2015), we use some case studies of resource-rich countries to substantiate the narrative.…”

“…Given that growth in the sub-continent has fundamentally been driven by resource-rich countries (Asongu, 2015), we use some case studies of resource-rich countries to substantiate the narrative. We consider the examples of Equatorial Guinea, the Republic of Congo and Gabon used by Ndikumana and Boyce (2012) and compare with corresponding 'quality of growth' performance from Mlachila et al (2014).…”