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Sustaining India's growth miracle requires increased attention to inequality of opportunity


Branko Milanovic
In 2006, the World Bank set up a blue-ribbon Commission on Growth and Development to understand why some countries achieve growth miracles and others fail. Reflecting on the findings, Michael Spence, who chaired the Commission, wrote that “perhaps the most important lesson was that growth patterns that lack inclusiveness and fuel inequality generally fail” (Spence 2018). Since the Commission’s work, India has joined the list of growth miracles, bearing out – and narrowly beating out – the forecast by Rodrik and Subramanian (2004) that India would grow at 7% per year annually for the next 20 years. The four-fold increase in average incomes since 1990 has lowered the share of the population living in absolute poverty from 45% to 20%, improving the lot of 130 million people.  ....

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The pandemic public-debt dilemma


The pandemic public-debt dilemma
By Michael Spence and Danny Leipziger
MILAN Increased government spending during the pandemic is essential for managing public health, supporting households that have lost income and preserving businesses that otherwise may fail and thus cause longer-term damage to output and employment. Kristalina Georgieva, the managing director of the International Monetary Fund, has urged policymakers to “spend but keep the receipts”. Likewise, World Bank Chief Economist Carmen M. Reinhart reminds us that, “first you worry about fighting the war, then you figure out how to pay for it”.
Although these are sound recommendations for countries with solid fiscal foundations, the long-term risks of increased spending may be dangerously high for others. In 2008, the Commission on Growth and Development, on which we both served, showed that successful developing countries owe their economic growth in part to the quality of their social and capital ....

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