Economic inequality has been a growing concern in recent years. The huge gap between the “haves” and the “have-nots” is clearly illustrated by a recent Oxfam report which show that the 85 wealthiest individuals in the world own half of the global wealth. Inequality was also on the top of the World Economic Forum agenda in Davos, Switzerland earlier this year.
There are many reasons to be alarmed by these statistics, but perhaps most importantly we should understand that behind the figures are real people from all walks of life who lack the opportunities to advance their lives and improve their communities. It is also important to remember that the private sector plays a vital role in providing solutions to economic inequality.
At a recent Brookings event “Promoting Shared Societies,” a distinguished panel of experts shared their thoughts on the implications of growing global inequality and the Millennium Development Goals.
The concept of shared society refers to inclusive, prosperous and dynamic societies that seek to provide the same social and economic opportunities to all citizens regardless of gender, ethnicity, religion or disability. The economic argument for inclusive societies is that “shared societies generate economic dividends” through the utilization of the “skills, strengths and talents of the entire population,” driving economic growth and productivity.
Inclusive economic growth fosters stability and democratic governance. Wim Kok, former Prime Minister of the Netherlands, noted that reducing economic inequality is an important goal for both developed and developing countries and an imperative for meeting the Millennium Development Goals. Cassam Uteem, the former President of Mauritius, discussed how his highly heterogeneous country has been able to put in place the concept of shared societies through political compromise, education, and acceptance of difference as the basis for a shared future.
John Podesta, former chief of staff to President Clinton and advisor to President Obama, illustrated that the notion of shared society is expressed in a woman’s right to inherit property and in an individual’s right to have a legal identity. Podesta pointed out that relying solely on GDP growth as an indicator in international development is insufficient as the more important question is to engage people in the margins and better connect them to economic and social opportunities.
The involvement of the private sector in partnership with governments and international institutions is a strategy to advance the global development agenda and reduce economic inequality. Labor market reforms that ensure access to formal jobs with benefits and health insurance are an avenue towards ensuring shared prosperity. CIPE’s longstanding work in the area of the informal sector and property rights helps ensure that businesses are able to register and operate legally, provide employment opportunities, and pay the taxes that provide education, health care, and public services.
In many developing countries private property rights are insufficiently respected, leading to higher rates of informality, reducing government revenues and economic growth. CIPE’s work supports the concept of a shared society as our programs seek to bring the necessary systemic changes in developing countries to ensure inclusive economic growth and democratic governance.
As the distinguished Brookings panel noted, equality is a moral, social and economic imperative that national governments and the international community should seek to fulfill through partnerships with the private sector and civil society.
Teodora Mihaylova is a Research Assistant at CIPE.