Inclusive Economics for Impact

The digital revolution is radically changing the global payment landscape. Even before the COVID-19 pandemic, the digitization of the global economy was gaining steam. Innovation is a major driver of trade, financial integration, investment, knowledge transfer, and development. This underscores the importance of harnessing the benefits of technology to ensure more segments of society – particularly marginalized groups like low-income earners, women, youth, rural traders, and micro, small, and medium-sized enterprises – benefit from the open technology that is increasingly characterizing the global economy in the post-pandemic era.

Traditionally, ESG issues have not been of primary concern to investors. However, the proliferation in technological innovations over the last decade and the global backlash against globalization, international migration, and other neoliberal economic policies –among other factors – have resulted in increased focus on costs, benefits, and distributional implications of pubic investments and policies. The corporate sector is also hyperfocused on advancing corporate and social goals through impact projects that resonate with the broader society. As decision-makers remain laser-focused on fixing the climate crisis and the ills of social inequality, ESG considerations are no longer side issues.

Both in the context of forecasting and comparing different policy options, economic models are indispensable tools for policymakers. Forecasting is a difficult, inexact science. Nonetheless, policymakers need information on future economic trends before making policy choices. While economic modeling is not a sine qua non for all policy decisions – given that big-picture predictions followed by dynamic adjustments may suffice – the use of forecasting models confers the benefit of presenting systematic and scientific arguments. From complex infrastructure projects and social justice to public health and climate change, the increasingly complex nature of society means policy questions are becoming more difficult to address. While neoclassical economics remains the workhorse of policy analysis and the public policy development process, like most systems, the economy is in a state of flux. As such, the unfolding patterns and ongoing renewal in the economy and society must be accounted for. This has implications for diversity, equity, and inclusion (DEI) economic modeling for policymaking.

A strong global trading system remains an essential driver of growth and development. Moreso, recent COVID-19-induced supply chain disruptions have reinforced the importance of trade in the global economy. While the unfolding pandemic is an exogenous shock, it has disrupted economic systems with disproportionate impacts on marginalized populations. Trade policy in the post-pandemic global economy must improve the lot of low-income earners, women, youth, and micro, small, and medium-sized enterprises.

High income gaps remain an impediment to socioeconomic mobility of the less well-off. For development to be sustainable, it’s got to be inclusive. More segments of society need to participate in the economy. To move the needle, underlying structural barriers must be addressed. To unpack this, Jeff Finkle, President and CEO of the International Economic Development Council, joins podcast host, Dr. Fred Olayele. Among other things, Mr. Finkle sheds light on the importance of five critical determinants of mobility – parental income, education, race, gender, and geography.