The G20 articulates as its main purpose to achieve, inter alia, inclusive growth. It acknowledges that the benefits of globalization “have not been shared widely enough”. Leaders state that “most importantly, we need to better enable our people to seize its opportunities.” In fact, taming globalization was the very reason for introducing the forum in 1999.
Despite the clarity of purpose, the group of the 20 biggest economies remains unclear on how to achieve greater inclusion. The various outcome documents of the German presidency, which just ended with a tumultuous summit in Hamburg, send mixed signals. The declaration acknowledges the need for fiscal measures, but is careful not to mention redistribution. Human rights are introduced as a guiding framework to review Global Supply Chains. Particular target groups such as women entrepreneurs and rural youth are identified for specific support. Access to water, energy and ICT services for farmers shall be promoted through a variety of measures. The Hamburg Action Plan, under the rubric of “Promoting Inclusive Growth”, collects individual country measures ranging from labour market reform to free schooling, from enterprise promotion to special economic zones. The diversity of measures is confusing. To achieve its purpose, the G20 requires a guiding framework that defines inclusive growth and how to get there.[1] As part of this framework, the G20 must spell out the role of business in contributing to inclusive growth. Indeed, the role of the private sector and its contribution to an inclusive economy is not mentioned at all in the documents.
During past presidencies, the G20 has made good progress in defining “inclusive business” as a concrete private-sector led approach to achieving inclusive growth, along with policies to support it. After the G20 Challenge on Inclusive Business Innovation during the Mexican presidency in 2012 and an initial policy note on inclusive business policies during the Russian presidency in 2013, a comprehensive G20 Inclusive Business Framework was adopted by the G20 during the Turkish presidency in 2015. It outlines the role of the public and private sector in furthering inclusion of low-income people into value chains as consumers, producers and entrepreneurs. In 2016, the G20 Global Platform on Inclusive Business was launched to disseminate good practices. The German Ministry for Economic Cooperation and Development was one of the main promoters of the inclusive business approach from the very beginning of this process.[2] It is therefore a particular pity that no progress was made on the matter during the German presidency.
In an ever more interconnected world, and in a world where globalization and digitalization are disrupting established structures, new business models are needed to provide opportunities to all people. Entrepreneurs and companies have the innovation and investment power to develop and implement these solutions. However, the barriers are high and the incentives not always compelling enough to enter the low-income market. Without policies that enable and encourage businesses to be more inclusive and empower low-income populations to enter into value chains, change will not happen at the required scale and speed.
Policy makers are keen to learn and exchange about existing experiences with inclusive business policies, as the Policy Dialogue on Building an Enabling Environment for Inclusive Business through Public Private Collaboration organized by IBAN, IFC and UNDP in May showed. We need deeper research, more effective learning opportunities, and, above all, more experimentation to move from a high-level framework to a practical, applicable set of policy tools. The G20 is the right forum to drive progress on inclusive business policies, as it brings together industrialized and emerging economies under the common goal of inclusive growth. Ojalá, Argentina will bring back the inclusive business agenda under its upcoming G20 presidency.
[1] The Hamburg Action Plan refers to a “Framework to Help Guide the G20 in its Development of Policy Options to Foster More Inclusive Growth” by the IMF as well as the OECD/WBG’s, but this document is not available publicly, so it is hard to tell whether it offers such a guiding framework. If it doesn, it has not found its way into the outcome documents.
[2] For example, it commissioned the report „Inclusive Business Policies“ that, inter alia, informs the existing G20 outputs on inclusive business (and was developed by Endeva, for full disclosure).
This blogpost has been authored by Endeva director Christina Tewes-Gradl and also posted on the Practitioner Hub for Inclusive Business.
