Policy Framework for Inclusive Growth: A Case Study of Selected Asian Countries

Aribah Aslam and Kalsoom Zulfiqar

Abstract

This study analyzed the long run and short run impacts of education, health, trade openness, inflation, GDP per capita and most importantly umbrella of institutions on inclusive growth in for less and middle developed Asian countries. The results from VECM provide evidences for inclusive growth in the long run but not for short run, as it itself is a long run phenomenon. Indicators like regulatory quality, political stability, law and order, control of corruption and trade openness are used to highlight the institutional role in achieving inclusive growth. On the other hand, the impact of GDP per capita and government effectiveness on health is significant in these countries. Empirical findings also indicate that Inflation and rule of law play a significant role in improving the health quality, which leads to inclusive growth. Study also forecasts the effect of shocks in independent variables to inclusive growth for policy measures. The long lasting impacts on inclusive growth are the result of education, GDP growth, umbrella of institutions and rule of law. The absence of such factors restricts developing countries away from reaping the benefits of inclusive growth. Therefore, it is suggested that major focus of public policy must be to improve institutional quality along other socioeconomic factors to improve the human welfare.