 I think many of you may have heard of Hans Rosling before. He is the Swedish scholar who just passed away, in fact, but he's famous for his beautiful interactive graphs and kind of changing the way we see the world. And one of the things he did brilliantly, I thought, was to visually demonstrate to all of us that the way we think of the world, developing country, developed country, is fundamentally wrong. That's an old construct from decades and decades ago. It doesn't apply to today's world. But it's interesting, even in the global development world that I work in, it's hard to get rid of that mental construct. Once we get an idea, the inertia around that framework, that mental framework is tough to change. And I think it's a similar situation with the idea of prosperity and growth. We all know GDP. It's something we've learned since we were kids. We've studied this. GDP is the way we typically measure progress in the world. But as a measure of today's world, it's really inadequate. And it leads potentially to some mistakes in policymaking if we focus on GDP as a decision-making tool. So what I want you to get out of this session in part is, at the end of the session, hopefully you will walk away saying, in the same way that it's no longer developed in developing countries that are the framework for our planet, that it's not just GDP anymore, it's the IDI, Inclusive Development Index, which we will talk about in a moment. To join me in this discussion about what Latin America can do to make its economic growth more inclusive, we've got two ideally positioned people, Richard Simons, who is, of course, the head of the Center for the Global Agenda here at the World Economic Forum. He's also a member of the Managing Board of the Forum and has long experience on Capitol Hill and in the White House working on these kinds of issues. So thank you for joining us. And Annabel Gonzalez, who was the Minister of Trade in Costa Rica, led her country's Competitiveness Council and is now at the World Bank where she leads the trade and competitiveness work. She's the senior director of that global practice. So thank you both for being here for this discussion. Rick, can I start with you? I'd like to just get a sense first of what is IDI, this actor in my thrown out, and why does it matter when we think about inclusiveness? Thank you. Thanks, Raj, for moderating and setting up very nicely the discussion today. We for some time have been hearing in our various meeting platforms and with our partners and others an increasing interest in trying to frame a better, more balanced growth model and inclusive growth and development. There's effectively, I think, a consensus around that as a direction. But there is much less consensus about exactly what, the practical aspects of that. How do you actually do that, if you will? But to your point, from low income countries to middle income countries to advanced countries, there is virtual agreement that we need to adapt our mental map and the way we conduct economic policy and how we think about economic growth so that it produces a much broader social benefit, if you will. And that you can see, that yearning you can see reflected in the ballot box in various kinds of countries, including my own most recently and sometimes on the street. So this is one of the critical issues of our time, if you will. So the forum is not an academic institution. It's very much operating in the applied and the practical world. And it has, well, we're an international organization for public-private cooperation, so we're really a multi-stakeholder body, but we do have something special, which is the private sector at the core of the organization as members and partners. So we took, if you will, a very practical, almost, if you could call it this business-like approach to thinking through, almost like a business would. If we need to have a new strategy, if you will. Well, what works? What can we observe from existing practice that works? And who's conducting the best practice? Can we get some data here, essentially, to benchmark against the success models that are occurring? And then out of that, can we construct the outlines of patterns of what then might inform a strategy? So the Inclusive Development Index that you're talking about is one element of an outcome of that whole thought process, which in a nutshell, what we have done is to identify from historical experience and research what seems to work or what has worked for countries that have experienced both strong growth on the one hand and reasonably high equity, social equity at the same time. And out of that collective experience, if you will, we concluded the following, and I'll try to work rather quickly through this. One is that, very fundamentally, the bottom line measure by which a society evaluates the economic performance of its leadership is not growth, per se, but rather it is sustained and broad-based progress in living standards. Living standards. Living standards encompasses several things. One is income. Another one is opportunity or employment possibilities. Third is economic security. And fourth is quality of life. And so you can think about economic growth as the top-line measure of a country's economic success. But the bottom line, and business people, I think, will understand this analogy here, the bottom line is, in fact, the extent to which meeting living standards progress in a sustained fashion over time. And so we start with, if you will, it's a new way of thinking a mental map, you kind of are articulating, we need different mental maps. Well, that begins with having an understanding of what is the anchor here. What's the North Star? And I think, let me pause here on that and then maybe a little bit later in the conversation I'll go into the different elements of what we found as to what works best and how you can operationalize that into a framework. Very good, thank you. And you made me think of an example I heard yesterday here at this forum. Simone Gavidia was from the Ministry of Planning in Columbia said that, for example, the way they're looking at their own development strategy is there could be a person who is technically above the poverty line, $2.50 a day, I think is the World Bank's line for the region, technically above the poverty line and income, but might not have a bathroom, might not have sanitation or running water. What is that person's quality of life? And we need to think more broadly of that individual and how they're living. So to you Annabella, at the World Bank you've got a team of 500 people working here in the region and elsewhere, but meeting with governments like in Columbia, like here in Argentina, what kind of advice are you giving them to take what Rick has laid out as the map and actually implement that on the ground? Well, let me maybe start by saying that as you know, the World Bank group has two key objectives. One is eradicating poverty by the year 2030 and the second one is boosting shared prosperity. So from our perspective, when we look at a partner as the World Economic Forum and this inclusive development index I think it's a very important instrument to help us think about our own goals and how do we go about achieving those goals. And one very important point is the consistency across the different areas of policies. Because it's not only about promoting growth which as Rick was saying is very important but it's also having in place a number of policies that will help actually most people to benefit from that growth. We have seen, we've saw it in recent years a number of countries that have high growth rates that does not necessarily translate into well-being for the population. So if you take for instance an area like trade, one of the areas in which we work with a number of countries here in the region, we see that trade can be a powerful driver of growth. But how to make that growth benefit all you need to think about other policies that are as important as your trade policies. For instance, you need to make sure that your population has the skillset to be able to take advantage of the growth opportunities. You need to have in place social safety nets to mitigate the cost that may be associated with trade. You need to have broader competitiveness frameworks that will continue to foster this virtuous relationship between growth and opportunity for the members of your society. So this points about greater consistency across policies is one that comes I think very clearly from looking at an index like this one because at the end it's not just one policy that can drive those results. It's consistency, coordination, prioritization of these different policies. I think as Rick was saying earlier the moment is important for us now on this. We've been talking about inclusive growth for a long time but the trade conversation of no trade or trade is not really the right conversation as you're saying it's not the right way to do it. And I guess getting to that point I wonder if Rick you can give us some insight into the demand for this. You're talking to corporations who are thinking about how can they participate. You're talking to government leaders, heads of state. What at the country level and particularly thinking about this region what is the demand for changing the way they develop their own growth strategies? I think the demand is enormous. Some of that demand is revealed because you've got governments really searching for new strategies under the hot glare of the political attention in their countries and other domains maybe it's not as explicit demand but there's I think a recognition that the model needs some updating the model, the economic model. Let me make a point or two building on Annabelle's comments. Indeed what she said is extremely important that it's not, there's no silver bullet if I can articulate it in that way. And what we've done here looking at experiences identified 15 different areas of structural policy incentives and institutional strength particularly institutional strength that matter for finding the win-win between the rate of growth on the one hand and the extent to which the population as a whole participates in the process of growth, employment on the one hand and receives full benefit from growth that is to say income, security, quality of life and the rest. So these are, as Annabelle's saying these are 15 distinct dimensions which we think operate as an ecosystem and you have to think about inclusive growth not as a okay there's a trade policy right here or macro there and you're pretty much done you gotta look at a whole range of structural areas of policy and see how well that's functioning or not functioning as a system. If it's in some countries it functions in a virtuous circle where growth and inclusion have a positive feedback loop and feed each other. In other cases where the system is deteriorated or is not functioning properly you've got a vicious cycle where you've got a decline in domestic demand weak domestic impetus for growth on the one hand and weak progress or stagnation and living standards on the other. And I like to think of this framework of these 15 areas as effectively the implicit income distribution system underpinning modern market economies or to be a little bit more precise about it this is the mechanism by which living standards are diffused across society stemming from progress from growth right and unless I mean for years talk about the mental map for economic policy for a generation or so we have economists and policy makers had a mental map where we focused almost exclusively I would say on getting your macroeconomic policy right prudent fiscal and monetary policy on the one hand openness because it's really important for getting your market signals correct and trade embodies technology and keeps you competitive with where the frontier is moving generally and you've got in your domestic markets you also have to make sure that market signals are functioning properly flexibility in product market capital markets and the like that's effectively an efficiency agenda which is absolutely important for the level of growth don't get me wrong that is extremely important it's a sine qua non of getting the kind of living standards progress you want but it's not sufficient it's necessary but not sufficient there's this ecosystem of other structural policy areas and institutions such as the ones that Annabel has mentioned which influence the pattern of growth and thereby the extent to which the top line of a healthy growth rate translates into the bottom line expectation of society in terms of broad base progress in median living standards and that's what this inclusive development index and the underlying policy indicators the cross country data base that we put together enables countries to see they can look across the 15 areas and see how strong or weak they are relative to their peers in the different and four different income categories of countries around the world and the idea is okay this is data every country is different but at least you see the data where you are in a way you're healthy or relatively weak in this policy ecosystem and if you want to construct an inclusive development strategy this is a place to begin and it operates on a different plane really a more strategic plane than the typical political conversation we see play out in this region for example which is often growth versus redistribution of income this is a different way of looking at it entirely is that right? That was exactly the point I was going to make that there's efficiency and inclusiveness are not exclusive I mean in that sense you can have efficiency with inclusion and I think this is what the conversation is about because it's not and you're right that maybe Latin America is one region where this has played historically as an either or and I think the question today you know the discussion today is about how do you have more efficiency and more inclusiveness at the same time and so you can enter into this virtual circle that Rick was referring to and I think that we see a number of countries in the region who are actually doing that way you know you come to a country like Argentina and you see that there is a discussion of course associated with growth and the macro reforms and the micro reforms and that's very important but you also see a very strong agenda you know in areas as to how do you enhance the skills of the population how do you update the infrastructure how do you look at some of the more you know typical social agenda issues in a way that is more integrated with the needs of having an economy that is much more competitive so I think Latin American in that sense is moving from some of these discussions of the past that really you know didn't really take the region too far and coming into a more in a different sort of mindset with a different conversation that I think can be much more productive in this region it seems like a key to that we heard in some of the sessions yesterday a refrain around institutions and we've just heard Rick pick this up again so I wonder if either you can talk a little bit about that thinking about you know government leaders, business leaders who are to form like this what can they do to strengthen the institutions in a direction that's aligned with this inclusive growth idea can you talk a bit to that let me give you a few examples so these 15 of institutional strength are areas where there is theoretically the win-win that Annabelle just referred to in other words if you get your policy incentives right and you build robust institutional frameworks in these areas it's both good for growth the rate of growth as well as for broad social participation in the process and benefit let me give you some examples and we're sitting here in Argentina at the beginning of a remarkable reform effort and I think we can underestimate the extent of leadership that's being exercised here but let's give you a few examples of what kinds of institutional frameworks we're talking about here education so Argentina actually has a rather good performance on educational access by our measure a third out of 26 upper middle income countries in this regard on the other hand it's dead last in terms of educational equity so education is one of the most important structural institutional elements of a strategy here but most of the numbers most of the attention usually is on enrollment and basic education and tertiary and what not but actually if it's about inclusive growth then what you have to look at is whether that educational access and quality is diffused widely across the population that's one example second one business and political ethics a big issue around the continent and around much of the world this is an area where again you have an absolute win-win for growth and equity if you improve the ethical environment on both the political and the business side this country unfortunately six 25th out of 26 by our data for upper middle income countries on measures and perceptions of business and political ethics a third area is on the financial side and one of the one of the significant things to note about our inclusive growth and development framework is that yes it looks at some of the traditional areas of focus on inequality like education and redistribution on the other hand there are other elements in this framework which are really about the business enabling environment and particularly the small scale business enabling environment the extent to which finance is intermediate from domestic savings into real economy investment this is business language right and business language and business topics usually aren't included in discussions about social equity and inequality but frankly for that matter corruption and ethics but these are fundamental elements of what you need as a balanced and comprehensive strategy on inclusive growth and here too as the government has properly recognized that the financial intermediation of real economy investment here is not functioning as well as it could be they are again dead last 26 upper middle income countries in that in that regard so these are some of the examples of institutional and structural areas of policy where you can get win-wins and indeed if you look at the Argentinian government's reform strategy they are absolutely targeting a number of these areas it shows the power of an index to be able to look at that and have that discussion and say here's where my country is and this is where I want to go one important point that I wanted to make is that we have been discussing here about the role of policies and that's absolutely very important but there's also the another angle to it is the role of the private sector and private sector practices that foster inclusive growth so this is an area where both the forum and us with the support of the government of Canada and Germany launched a call for proposals to learn about business practices that foster inclusive growth and actually we've received a good number of very interesting cases that we are evaluating right now and you know we have cases for instance of a company meal flower this are three college graduates who worked on a nutritious like a super nutritious food that can be used for addressing attacking malnutrition this was developed in Guatemala this is a very interesting case about how can you come together with business models that at the same time they're successful they generate growth but at the same time they're also serving a very important social purpose so again and you know partnering you know institutions that have similar visions to try to promote this new idea that it's not about choosing between you know efficiency and inclusiveness but rather how to bring them together both at the policy level and also at the private sector level great thank you for that we have time I think for two quick questions if we have any from the floor I think there's a microphone perhaps that will come around to you we've got one in the front and another one here I just ask you can give us your name and your organization and try to keep it hi my name is David Head I'm with Alex Barnes a quick question really and I wonder whether you considered redefining what a job is at any point in this analysis because I think that we talk about jobs and productivity but that's with an ancient frame of reference you know I get up in the morning I clock in at 8 o'clock I do a 40 hour week like my father did and his father and his father and I think that's an antiquated frame of reference now and when we talk about productivity of a person it needs to be modern that's what you do for the society in which you live and how can we value that and let the people know that they're doing things other than a standard job that is valued and we can reward it in some way other than wages interesting thank you and a question over here if we can bring the mic over we're gonna do we're gonna do both at the same time and then we'll tackle up with this two days I haven't heard the word church or organized religion mentioned as an outsider it's like a big elephant in the room what's their role what are the problems I don't know if it's in Chatham House Rules or not but I'd love a candid response and Eisenberg various alright so we've got a question from David about are we thinking about jobs in the right frame here too is that another area like GDP we've got to change the way we look at it and a question from Daniel about organized religion the role of faith communities and are they part of this discussion in some way or should they be he hasn't heard it so far before either of you want to pick up on either of those points and we're getting sort of wrapping up so you can include some wrap up comments as well if you don't mind let me just briefly say that jobs continue to be the most important the most important instrument for people to come out of poverty because what poor people have is basically their own labor so that doesn't mean that the nature of jobs are not changing but and I think that this is a question that probably would motivate a long answer that we can probably take offline but to say that I still creating jobs continues to be the most important way of coming out of poverty in many places two quick thoughts one is the issue you're raising the changing nature of work is is quite fundamental to this body of work you know again the traditional way reformers have looked at labor market issues has been about flexibility but in fact if you're interested in inclusive growth and living standards as opposed to just top-line growth if you will you're really interested in the fact that in several years a third or more of the work that's been created is what they call non-standard work not the full-time salaried arrangement with benefits that come with it but rather it's temporary or independent contract or other type of more flexible work sometimes stacked up in multiples as you're suggesting different unfortunately for many countries not most the framework for benefits and taxation and the like is basically oriented toward the traditional model of full-time salary arrangements and in a world where the nature of work is shifting it's out of sync and that is contributing frankly to the problem of stagnating living standards or underperforming living standards if you will so I completely agree with you and we address some of that in this report and we're going to do some follow-on work in that area on the interesting question of religion I would I would argue that while maybe you didn't hear about it here generally on this topic religion and organized religion is actually having a significant effect and we're here in South America where the Catholic Church is quite important and the Pope has really provided a degree of energy if you will to this discussion about social equity and growth and what is an economy for in a way I have not seen come from almost any institution of society in fact this work began it had its first public light of day in the Vatican where we hadn't yet released it but we wanted to test it a little bit and so we did with the Vatican we did a co-convening of a multi-stakeholder community and some of the religious community there and I believe that this notion of shifting the what economists would call the policy anchor the compass setting from growth still absolutely vital but to something that's more meaningful for human beings which is broad base progress and living standards is essentially also it makes good sense economically but it's also just right it's morally the right way we should have our minds think about economic progress and I personally believe as somebody who works in this field that the influence of the religious community not only but maybe most dramatically in the form of the Catholic Church and the current Pope is really an important force for progress in this area well thank you with that we need to wrap up our session I'll just say I think this is an important moment hopefully one that we all will look back on and remember for Argentina certainly but really for the whole region and for the world this is a moment where we need to get this right shifting this kind of mental framework and the GDP to IDI is not an easy thing but if we don't figure out how to make all people and all societies part of the amazing potential that you see in a form like this when you think about the technological innovations that are coming the new models for growth that are out there making sure everyone is a part of that is absolutely critical so I hope we walk away remembering IDI get the old GDP model well it's important but for the side and remember inclusive development is really the future thank you