6. The Inclusive Growth Concept: Strengths, Weaknesses, and a Research Agenda for Indonesia

In the last decade, inclusive growth, a broader concept of economic growth came into vogue among international organizations and countries’ policy makers. This paper reviews recent studies on inclusive growth addressing the following issues: which indicators have been considered, how they have been combined, and to which extent can existing research on inclusive growth provide a better understanding of the economic development process in an emerging economy like Indonesia. Many studies use one index and a single-equation approach to measure the determinants of inclusive growth. This paper suggests an alternative approach for future research that can shed more light on (the drivers of) (the different components of) inclusive growth, i.e. using a simultaneous equations model or a structural equation modelling approach. We can, thereby, provide better analyses and policy recommendations to achieve inclusive growth.