Inclusive Growth and Prosperity

e countries (LICs) to MICs. It is e

Defining MICs has been of continuous interest for the international community.  Different organizations have developed various classifications based on national income, level of industrial development, trade openness and other indexes. However, none of the previous efforts provide a precise definition of the category of MICs. A widely used definition is that of the World Bank, dividing the MICs in an upper and lower segment based on per capita gross national income. While often used to measure the growth and prosperity of a country at average, it is felt that this classification may be inadequate for actually characterizing MICs in view of the complexities of their prosperity challenges, including those linked to the uneven distribution of wealth, sustainability and connectedness.

Since the adoption of the Millennium Declaration in 2000 and the creation of the Millennium Development Goals (MDGs), millions have been lifted out of poverty. The percentage of the world’s population living on less than $1.25 a day fell from 42 per cent in 1990 to 25 per cent in 2005, and is projected to fall to 14 per cent by 2015.  This impressive success on income poverty is largely due to the increased industrialization and growth of related economic activities in a range of developing countries, and especially China. However, progress towards reaching the full range of MDGs, which did not prioritize economic growth as a means of achieving development objectives, remains uneven.

One remarkable change in the past two decades has been the shift in location of the world’s poor from low-incomstimated that in 1990 over 90 per cent of the world’s poor people lived in LICs, while there is evidence that today almost three-quarters of the world’s poor live in MICs.

At the same time, the ongoing global financial and economic crises, the food and energy crises, as well as the more recent European sovereign debt crisis, have had a negative effect on world economic growth and continue to pose challenges to development efforts.

Poverty reduction strategies in MICs therefore need to include economic structural transformation policies, human resource investments and targeted private sector development strategies.