How to define and measure inclusive growth: a perspective from Wales

What is inclusive growth? It is broadly a concern for making sure those people that have not benefited from economic growth start to do so.

In simple terms, inclusive growth ought to provoke us to question what growth data conceals and what negative consequences existing growth patterns may bring about. As Charlotte Alldritt suggests in her launch blog for the Inclusive Growth Commission, existing regional policy and localising instruments in the UK - such as City Deals - are typically mandated on fairly narrow growth objectives.

This presents the risk that we may be missing other key features in the way urban, and social systems more generally, cohere and interact.

Whilst the shift in emphasis toward inclusivity is clearly warranted and welcomed in the UK context, it might be possible to question whether there is anything new in the “inclusive growth” agenda, or are we simply re-rehearsing old and somewhat forgotten arguments?

Yet in the devolved administrations, it may even be argued that inclusivity has continued to play a strong role in certain policy framings. But despite this, uneven spatial shocks following the financial crisis, and their lagging effects in labour markets particularly, mean we must urgently get to grips with inclusivity.

Regardless of the broad desire to moderate the growth emphasis, there are still many questions relating to the definition of inclusive growth, including questions about whether it is:

• Inter- or intra-city inclusivity.
• Urban or rural inclusivity.
• A people or place focus.

These manifest in important ways in a country such as Wales, where urban areas only intermittently populate coastlines and where places of decline and growth sit closely together.

That implies that the issue of measurement looms large. This includes how we develop a picture of inclusivity beyond raw output-based metrics (such as GVA), and how we weigh up or rank different and sometimes competing indicators.

From a technical or conceptual perspective, researchers are making progress in setting the terms or dimensions that inclusive growth should encompass. For example, Beatty et al have developed the “inclusive growth monitor”, in a report for the Joseph Rowntree Foundation, and present “18 indicators to capture the relationship between economic performance or potential ('prosperity') and poverty and related forms of disadvantage (‘inclusion’)”.

Reflecting on earlier studies, such as Rowntree’s evidence review, that have explored growth and poverty relationships, it is clear that such relationships are complex and that there is no ‘automatic link’ between them.

Take Wales, for example. At a national level, narratives of the country’s lagging economic performance vis-à-vis the UK, the problems caused by persistent low wages, coupled with ongoing concerns about industrial re-structuring - and the community-specific effects this creates - continue to trouble policymakers. At a sub-national level, city-region evolutions are in their infancy, though Cardiff’s City Deal - underpinned by an unequivocal growth focus - now provides the clear convening logic.

What EU exit will entail for such issues and initiatives is perhaps anyone’s guess at this point.

Observers of the Cardiff city-region context are acutely aware of the great heterogeneity - in terms of deprivation and socio-economic standing - which exists across communities in south-east Wales. Relevant geographies here include the coastal belt to the Heads of the Valleys, and within individual local authority areas (ten of which make up the Cardiff city-region).

Given such spatial variety, we can dispense with the idea that growth will emerge evenly in places across the city-region as a fiction. This then raises the question as to how we can design regional policy that places ‘growth’ and ‘need’ more in balance.

Institutional devices, in the form of Public Services Boards, brought about by wellbeing legislation – the Wellbeing of Future Generations (Wales) Act (2015) – promise new possibilities for re-affirming inclusivity as a core focus for regional policy.

Though precise metrics are being devised and worked through at present, the goal of a ‘more equal Wales’ is a key platform, and especially now. It remains to be seen where the dividing line between rhetoric and reality will be drawn here, yet through such legislative mechanisms - and coupled with the foundational sustainability focus given in the Government of Wales Act (2006) - policymakers in Wales are conceivably in a pole position to lead on an inclusive growth agenda (in Scotland, ‘inclusive growth’ is already positioned at the centre of the Government’s economic strategy).

David Waite is a research associate specialising in economic geography at Cardiff University.