The good life: countries

Measuring inclusive growth across countries

13 June 2019

By Zoë Billingham, John Dudding, Ben Franklin and Andy Norman

3 minute read

This report, the first major output of the partnership between the Centre for Progressive Policy (CPP) and the All-Party Parliamentary Group (APPG) on Inclusive Growth, introduces the new CPP Inclusive Growth Country Index.

Delivering inclusive growth (IG) is one of the most urgent challenges facing economies across the world. Simply, the economy is not delivering prosperity for all. The pervasiveness of GDP statistics as the principal barometer of economic performance is a key barrier to achieving inclusive growth, reinforcing an economic status quo that prioritises quantity over quality. Developing new, credible measures of inclusive growth and embedding these within economic decision-making is a critical step towards achieving broad-based economic prosperity.

CPP has partnered with the APPG on Inclusive Growth to launch an ambitious new project to develop new measures of inclusive growth at the country, community and employer level. The three measures seek to help redefine what we consider to be economic progress.

This report is the first stage of the project, presenting the CPP Inclusive Growth Country Index. Building on previous work in this space, the index combines data on consumption, life expectancy, leisure, consumption inequality and unemployment to produce an economically robust metric for inclusive growth across over 150 countries.

Use our interactive map to explore the CPP Inclusive Growth Country Index and its five component scores:

Key findings:

  1. There are important differences between GDP per capita and the CPP Inclusive Growth Country Index across countries Iceland and Luxembourg have similar IG scores despite Luxembourg’s GDP per capita being almost twice that of Iceland’s. Indeed, there are countries with a ratio of IG score to GDP per capita as low as 0.29 and as high as 1.51. GDP per capita is thus an inadequate proxy for economic progress.
  2. The richer a country is, the less relevant GDP per capita is for inclusive growth. The relationship between GDP per capita and IG score is stronger for countries with a GDP per capita below 50% of the US level. For richer countries, GDP per capita provides less of an indication of IG score.
  3. Inclusive growth is closely related to-but distinct from - other measures of welfare. There is a strong correlation between the UN Development Index (HDI) and the CPP Inclusive Growth Country Index. Yet there are important deviations.
  4. Central and Eastern European countries are catching up fast. Amongst OECD countries, those in eastern and central Europe experienced the fastest growth in their IG scores between 2000 and 2017. Five of the top six fastest growing countries joined the EU in 2004.
  5. The UK has a relatively high IG score but suffers from sluggish improvement. The UK’s IG score places it 12th out of 36 OECD countries. The growth in its IG score is relatively slow, however, leaving it 22nd in the OECD rankings.

This report sets out the first of three inclusive growth metrics that we will deliver as part of this project. The next will capture inclusive growth at a community level in the UK and will follow closely the methodology developed here, with the addition of the exploration of policy drivers. Later in the year, we will develop a employer level inclusive growth metric. Together, these three coherent measures will illuminate what local and national decision-makers and employers can do to drive and deliver inclusive growth in the UK.

Watch a summary of the three reports.