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Action Area Policy: Growth that Works for Everyone

Context

In the last three decades, the world has seen the most significant decline in poverty in human history. Many factors have influenced this outcome, including the positive impact of technological innovation and international cooperation. Yet an estimated 736 million people still live in extreme poverty. As gender disparities in education, employment, productivity, health and earnings persist, the gap between the number of women and men in poverty continues to widen. 

Inclusive growth^{Footnote 1} is essential for accelerating growth and sharing its benefits. It helps to generate the domestic resources and capacity needed to address development challenges and eradicate poverty. It can only be achieved with the full, free and equal participation of women as economic actors.  Barriers remain to women’s full participation in the economy, including those related to unpaid care-related work as well as barriers preventing them from owning assets or accessing financial services. This restricts countries’ growth potential.

Innovation is essential to unlocking prosperity, especially in developing countries at a disadvantage in global markets. This calls for solutions to address the needs of the poor, particularly women, including by boosting productivity and reinvigorating trade and investment in developing countries.  To eliminate poverty and gender inequality, the following challenges must be addressed:

Political marginalization and discrimination often lie at the root of poverty, particularly for women. This calls for approaches to economic empowerment that also involve greater political inclusion. Identity factors often intersect with gender to drive the feminization of poverty. In addition, conflict and environmental disasters are key factors that drive people below the poverty line, and women, girls and children are disproportionately affected.

Women who engage in paid work find themselves at a disadvantage in labour markets. Women face significant constraints that limit their economic productivity and their ability to engage in higher-value markets. Women engaged in paid activities tend to earn less, and have fewer job options and career-advancement opportunities than their male colleagues. Many countries have laws and practices that restrict women’s job opportunities and reward men more for similar work. Women also find themselves in more precarious work conditions. They also have less access to land (through tenancy or tenure), financial services and other resources.

Compared to men, women shoulder more unpaid work and have less time for leisure or paid work. More attention should be focused on unpaid care-related work and its impact on women’s economic opportunities, as well as on its links to negative social and gender norms affecting men and women of all ages. Unpaid work should be prioritized for recognition, reduction, and redistribution, and targeted and integrated throughout efforts to promote women’s economic empowerment, including support for women’s entrepreneurship.

While the informal economy is often the only option for the poorest and most vulnerable, expanding formal-sector employment and entrepreneurial activity is desirable over the long term. The informal economy, with its precarious working conditions and absence of social protections, is the reality for half the world’s labour force, including a majority of women. Support for the informal sector should facilitate decent jobs and the transition of workers to the formal economy. Formalization enhances labour security and market development.

Inclusive business models require better understanding and monitoring of gender and poverty barriers. Greater experimentation, identification and scaling-up of new solutions to persistent development challenges are needed to reduce the marginalization of the poor.

With rapid changes in technology and labour markets, women and men need access to training throughout their lives. To improve economic opportunities, employment skills programs should focus on market-driven technical and vocational education, particularly for youth and women and for residents of isolated communities.

Inadequate and poor quality infrastructure hampers sustainable development by impeding access to economic opportunities, including markets and information. Women and girls are particularly affected by the dearth of infrastructure, including poor transport and communication networks and insufficient electrification. It increases their workload at home and reduces their ability to engage in paid work.

With an annual financing gap in excess of $2.5 trillion for developing countries to achieve the SDGs, innovative partnerships are needed to mobilize resources. Public and private infrastructure complements one another, and both need new forms of financing to catalyze inclusive growth. The private sector’s financial capital and know-how is critical, including to enable access to credit and ensure  quality infrastructure is built.

There has been insufficient investment in safety nets that protect the poor. When the next meal is not guaranteed, people must focus on survival and find it difficult to upgrade their skills, obtain employment and lift themselves out of poverty. Yet significant gaps exist in social programs, particularly in low-income countries. Ensuring living wages or providing equivalent productive assets, such as livestock, to the poorest has been shown to generate significant multiplier effects.

More attention must be paid to economic resilience, particularly in rural areas. With fewer economic opportunities than their urban counterparts, rural households, many already at or below the poverty line, are quickly pushed into destitution by the next crisis.

Women are still less likely than men to be included in the formal financial system — particularly among the poorest. Financial inclusion can enable the poor to mitigate risks through access to insurance, bank accounts, credit and remittances. However, the gender gap in account ownership in developing countries remains significant. Innovative financial instruments, technologies and infrastructure to reduce risks and mitigate impacts are needed to help those who escape poverty to manage shocks, such as crop failures, natural disasters and loss of assets.

Extreme poverty is increasingly concentrated in fragile and conflict-affected states (FCAS). Lack of economic opportunities provides a breeding ground for political instability, violent conflict and environmental damage, which further undermines economic growth. Private-sector development is necessary to promote growth and job creation, extend the tax base and raise the cost of a return to violence. Support for inclusive growth initiatives such as women’s economic empowerment and job creation can help to bridge humanitarian and longer-term inclusive growth interventions.

Environmental degradation and pollution threaten inclusive growth. Unbalanced patterns of growth have eroded the natural capital on which many poor households rely. Sustainable and responsible management of natural resources and appropriate responses to climate impacts are crucial to long-term economic viability. Addressing resource waste and overuse of natural assets requires incentives for more responsible consumption and production, and increased use of clean technologies.

Canada’s priorities

Under Canada’s Feminist International Assistance Policy, Canada’s development assistance in support of Growth That Works for Everyone contributes to poverty eradication and reduced inequality, especially for the poorest, most marginalized and most vulnerable, and increases women’s economic empowerment in developing countries where Canada engages. Upholding women’s economic rights and supporting their leadership in businesses, communities and institutions is essential to enable them to reach their full economic potential. Where women are fully empowered, including by recognizing their responsibilities for unpaid and care-related work, economies thrive and the benefits of growth reach more people.

Canada recognizes the fundamental role that the private sector plays in driving innovation, productivity and economic growth, and the need to partner with it to achieve development results. The economic empowerment of women cannot be achieved, nor environmental, social and governance standards raised and the SDGs met, without private-sector expertise and capital.  The most important funding flows to, and within, developing countries are private in origin, including remittances, trade and foreign direct investment. Canada engages in partnerships that attract co-financing and investment, by increasing and diversifying the range of mechanisms it has for working with the private sector, to encourage more innovative and cost-effective private and voluntary sector solutions to sustainable development challenges. Principles of economic equity, efficiency and innovation underpin Canada’s approach to inclusive growth. Meeting basic consumption needs is a proven means of reducing poverty and boosting shared prosperity. As farming families account for 50% of the world’s hungry, a focus on agricultural production addresses not only economic development, but also hunger and resilience. Investments in social protection, including through policy design and capacity building for sustainable livelihood and basic income support initiatives, are clearly needed to overcome the barriers people face in escaping extreme poverty. Increasing resilience through better access to clean energy also supports the transition to a low-carbon economy.

Canada’s integrated approach supports progress across other action areas. It advances Canada’s feminist vision of development by promoting women’s voice and agency in economic decision-making. It aligns with the Environmental and Climate Change Action Area by promoting stronger environmental governance and women’s participation in economic decision making, low-carbon and climate-resilient economies, and better environmental practices. Promoting sustainable pathways to growth and recognizing the obstacles faced by women calls for a rights-based approach. There are also multiple synergies with the Human Dignity Action Area, in particular technical and vocational education and training, which is essential to inclusive economic growth. Long-term economic development when combined with humanitarian action contributes to post-crisis recovery and reconstruction. Improved governance that supports economic rights, labour standards and living wages along supply chains can deliver tangible economic gains at scale. Canada is also advancing an inclusive approach to trade as part of its overall Trade Diversification Strategy, which reflects and promotes domestic and international policy priorities to support economic growth that benefits everyone and maintains confidence in an open, rules-based trading system.

Canada focuses its efforts to advance inclusive growth on three paths of action:

1. Bringing down barriers to women’s economic empowerment
2. Building more inclusive and sustainable economies
3. Strengthening economic resilience 

Canada prioritizes those initiatives with the greatest potential to reduce chronic poverty and gender inequalities, and that promote sustainable growth, economic inclusion and resilience, particularly through women’s economic empowerment. We look for innovative partnerships and financing arrangements that will help drive innovation, trade and investment in developing countries, particularly in fragile and conflict-affected environments.

1. Bringing down barriers to women’s economic empowerment

Canada’s objective in this path is to bring down barriers to women’s economic empowerment, by fostering legal, regulatory and policy environments that support gender equality and the participation of women in economic decision making. To attain this objective, Canada’s assistance focuses on increasing the economic leadership and empowerment of women at all levels, promoting women’s economic rights and access to decent work, and helping to address unpaid work and the disproportionate burden of care shouldered by women.

To help address these issues, Canada:

• encourages the development of women’s networks dedicated to helping articulate, promote and defend women’s economic rights and interests in formal and informal sectors;
• strengthens women’s voices and leadership roles by advancing rights of association in unions, chambers of commerce, cooperatives, farmers’ and other business associations, while positioning women as agents of change and as equal participants in decision-making processes;
• recognizes the impact of unpaid work on women’s ability to engage in paid economic activities. To alleviate women’s double burden and increase shared responsibility for domestic and care work, Canada supports advocacy efforts and legal, regulatory and policy changes that advance more equitable workloads in the workplace and at home. Initiatives also support access to childcare as well as time- and labour-saving technologies within households, while encouraging and empowering men to share in domestic, child and elderly care and other unpaid household work;
• supports the decent work agenda by promoting better work conditions through labour-protection research and legal, policy and regulatory reforms, equal pay for equal work, and access to non-traditional occupations. Actions also include promoting private sector implementation of the UN Guiding Principles on Business and Human Rights, the UN Global Compact and the Children's Rights and Business Principles;
• supports women’s right to economic resources by promoting women’s equitable access and control over resources, property and assets, including through secure and non-discriminatory land-tenure systems. Other actions include promoting and implementing reforms that advance women’s economic rights, freedoms and agency through mechanisms such as inheritance laws, property rights, financial services, consumer protection, regulatory frameworks and competition laws;
• encourages developing countries to fully recognize the economic rights, freedoms and agency of women. Depending on the context, potential approaches include awareness-raising; capacity-building; locally owned research; and institutional adaptation;
• supports the adoption of measures to combat sexual and gender-based violence and sexual harassment in the workplace and their negative effects on women’s ability to maintain gainful employment;
• provides technical capacity to governments and regulatory institutions to undertake environmental and human-rights analyses, multi-stakeholder consultations and gender-impact assessments as an integral part of economic-development and quality infrastructure planning. 

2. Building more inclusive and sustainable economies

Canada’s objective in this path is to help individuals and enterprises - particularly those led by women – to become more competitive, innovative, and green; to increase their employment and market opportunities; and to ensure that markets work better for the poorest and most marginalized, especially women and youth. To attain this objective, Canada’s assistance helps to build the capacity of institutional structures, supports entrepreneurship, expands access to capital and improves supports to the private sector. It also places particular emphasis on rural transformation, renewable technologies, value addition in the natural-resource sector, and investments in quality infrastructure.

To help address these issues, Canada:

• supports strengthening the key features of well-functioning market economies. Actions include supporting the formalization of micro-, small- and medium-sized enterprises, and supporting their competitiveness, diversity, resilience and good governance;
• supports the development of labour market systems, and of the capacities of industry and labour associations;
• pays particular attention in FCAS to building the institutional structures of inclusive growth, with a focus on the most vulnerable, especially women, given that fragility and conflict disproportionately affect women and youth in the economic sphere;
• advances an inclusive approach to trade that seeks to ensure that all segments of society can take advantage of the opportunities that flow from trade and investment. Canada’s inclusive approach to trade involves informed and inclusive trade policy-making, provisions in trade agreements that are responsible, transparent, and inclusive, and international engagement to advance support for responsible, transparent, and inclusive trade initiatives. Related actions include advancing responsible business conduct and social enterprise, good corporate governance, local procurement, responsible and transparent supply-chain development and diversity, and improving trade and aid coherence;
• recognizes that women and youth-led entrepreneurship is critical to support sustainable prosperity. To support entrepreneurship, Canada seeks to expand access to capital and other inputs, market information, business-development services, mentorship and business networking—with a special focus on women, farmers, and micro and young entrepreneurs. In addition, initiatives seek to strengthen the links between agriculture and other sectors of the economy to help rural transformation and diversification, as well as to develop sustainable ways to add value to agricultural, forestry and resource commodities to generate additional income;
• supports women-led private sector initiatives, financial inclusion and access to decent work, including through corporate gender equality mainstreaming as well as supplier diversity and procurement;
• supports farmers, and particularly smallholders, to make agriculture more sustainable by adopting more productive and efficient methods, as well as sustainable agricultural models that are better adapted to mitigate the negative impacts of climate change. These initiatives include support for climate-smart agriculture, agro- and community forestry for carbon sequestration, as well as for the development and adoption of on-farm green and renewable energy technology development and adaptation. Initiatives include helping farmers, especially women producers, develop business risk management tools, and better access investment promotion, markets, financing and business development services;
• promotes an inclusive and green private sector that benefits women and youth through support for digital technology and literacy as well as employment skills, particularly for women in fields related to science, technology, engineering and mathematics;
• supports new public and private quality infrastructure investments, including through analysis and integration of women’s specific needs in partners’ infrastructure initiatives, and evaluations of interventions on poverty alleviation and women’s economic empowerment;
• encourages multi-stakeholder partnerships that involve blended finance and impact investment to mobilize new sources of financing for development. Such partnerships can be implemented in collaboration with FinDev Canada (Canada’s Development Finance Institute) and other platforms for trade and social finance, including with the private sector, philanthropists, institutional investors and public institutions like the multilateral development banks. 

3. Strengthening economic resilience

Canada’s objective in this path is to help the poorest and most vulnerable, particularly rural women, escape extreme poverty by meeting their basic material needs and building their economic resilience. To achieve this objective, Canada’s assistance supports inclusive policy and programming reforms that recognize the specific needs of those living in conflicts and crises. It puts particular emphasis on new tools and technologies that help support financial inclusion and manage financial risks.

To help address these issues, Canada:

• helps to advance research and policy reforms that address exclusion in the form of financial insecurity and lack of employment. Initiatives also support social-protection programs, such as food or cash transfers, supplemented with special measures specifically targeting women and youth. When conducted rigorously, these initiatives have been shown to enhance individual, household and community resilience to economic shocks, and improve food security, consumption of products and services to meet basic needs and well-being;
• seeks to increase the income-earning opportunities of people living in poverty and to diversify revenue sources for poor households through carefully coordinated, time-bound, multi-sectoral intervention packages. These include skills training, seed capital and access to employment opportunities;
• adopts similar approaches to support the economic recovery of populations affected by natural disasters or conflict. Where context demands it, Canada seeks to place particular emphasis on the successful economic integration of Indigenous peoples, migrants, internally displaced persons and refugees to contribute to social stability as well as eradicate poverty;
• provides access to financial services and technologies, as well as to programs that facilitate access to savings or remittances, or that offer innovative methods of financial inclusion, including for migrants and refugees. This includes access to services that help those close to escaping poverty to sustain savings for future investment, stabilize consumption flows, or address emergencies;
• supports the development of financial and insurance products such as agricultural and health insurance policies that can help the poor and the near-poor manage risks, build resilience and achieve greater financial security;
• fosters economic and environmental resilience and provides foundations for inclusive growth by supporting urban development, integrated land-use planning and territorial approaches such as coastal zone and watershed management, including disaster risk reduction, preparedness and prevention. In fragile and conflict affected environments, this is done through a balanced approach that combines humanitarian assistance with sustainable-development interventions.

Selected Sources

General sources

• Gill, Indermit S.; Ana L. Revenga; Christian Zeballos. World Bank Group (2016). . Policy Research working paper; no. WPS 7892. Washington, D.C.
• International Monetary Fund (2011). . Staff discussion note (SDN 11/08).
• International Monetary Fund (2016). .
• Shepherd, A., L. Scott, C. Mariotti, F. Kessy, R. Gaiha, B. Sen, L. da Corta. London, Overseas Development Institute (2014): .
• World Bank. (2016). .

Economic rights and poverty reduction

• Banerjee, A. V., P.J. Gertler, & M. Ghatak. Journal of political economy, 110(2), 239-280 (2002): Empowerment and efficiency - tenancy reform in West Bengal.
• Lawry, S., C. Samii, R. Hall, A. Leopold, D. Hornby, & F. Mtero. Journal of Development Effectiveness, 9(1), 61-81 (2017): .
• Self-Employed Women’s Association. (2014) Chapter 7: .
• World Bank (2018). .

Gender and economic development

• Field, E., S. Jayachandran, & R. Pande. The American Economic Review, 100(2), 125-129 (2010): .
• Global Partnership for Financial Inclusion (2017): Alternative Data Transforming SME Finance. (Washington, D.C.).
• UN High-Level Panel on Women's Economic Empowerment (2017): .
• UN High-Level Panel on Women's Economic Empowerment (2016): .
• Oxfam Australia (2017). .
• World Bank (2017). .

Inclusive markets development

• Asian Development Bank (2008). .
• Chronic Poverty Advisory Network (2014). .
• De Haan, A. International Development Research Centre (2016): .
• G7 Ise-Shima Summit (2016). G7 .
• OECD (2018). .
• The Springfield Centre (2015). The Operational Guide for the Making Markets Work for the Poor (M4P) Approach, 2nd edition funded by SDC & DFID.

Social protection and inclusive growth

• Alam, K. & A. Mahal. (2014), Globalization and Health, 10(21), 1-18 (2014): .
• Berhane, G., S. Gidey, J. Hoddinott, N. Kumar, A.S. Taffesse, Y. Yohannes, J. Lind, M. Handino, K. Roelen, M. Tefera, and B. Nishan. IFPRI (November 2015). . Washington.
• Honorati, M., U. Gentilini, & R.G. Yemtsov. World Bank (2015). .
• World Bank (2011). .
• World Bank (2016). .
• World Bank Group (2016). Chapter 6: . License: CC BY 3.0 IGO.
• World Health Organization and United Nations Children’s Fund (2017). .

Resilience, financial inclusion, and inclusive growth

• Baulch, B., Cheltenham, U.K.. (2011). Why Poverty Persists: Poverty Dynamics in Asia and Africa, Edward Elgar Publishing Inc.
• Chronic Poverty Advisory Network. (2015). .
• Churchill, C. (ed.)  International Labour Office (2012). Protecting the poor - A microinsurance compendium – Volume II, Part 16 – Microinsurance that works for women.
• Jones, Linda (ed.) (2015). Financial and Market Integration of Vulnerable People—Lessons from development programs, Practical Action Publishing.
• Suri, T., & W. Jack. Science, 354(6317), 1288-1292 (2016): .
• World Bank (2013). .
• World Bank (2014). .
• World Bank (2017). .
• Women’s World Banking (2015). .
• Women’s World Banking (2016). .
• World Bank (2014). World Development Report. .

Related links

• Tip sheet on Strategic Environmental Assessment (SEA): Growth That Works for Everyone