Social development, in itself, is important. But it is not enough. No country has managed to raise living standards over the long term without growth. Child mortality rates in the 1980s for example, fell almost twice as much in countries where average incomes grew by more than one percent a year than in countries where average growth did not occur. We have seen how high inflation in many Latin American countries in the late 1980s and early 1990s, for instance, led to a worsening of income distribution and social disintegration.
Sectoral policies are key.
Strengthening basic infrastructure, and building strong local capital markets and well-functioning labor markets. Agriculture, in particular, is key. Policies that fail to benefit farmers will bypass most of the poor. Openness to trade and private investment is also key. Expanding trade means more jobs and higher incomes.