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Article | Global Markets Overview

Global Investment Outlook: Inclusive growth

The Opportunities of Inclusive Growth

February 1, 2022

A more inclusive and equitable economy can increase economic growth, improve financial returns, and raise prosperity.

This is one part of the Global Investment Outlook series. The other sections are focussed on prosperity and climate transition.

Inclusion – an opportunity for all citizens and places to contribute and benefit from economic growth – can broaden and increase demand and prosperity. As public- and private-sector leaders increasingly integrate equity into their policy and growth strategies, investors need to manage the risks and opportunities that arise from the value of this social and economic investment.

Income and wealth inequalities are very large

Unequal access to economic opportunities and economic inequality can negatively impact growth and prosperity. For example, inequality tends to lower aggregate demand, reduce the size of talent pools, and constrain innovation, entrepreneurialism and productivity. In short, a more inclusive and equitable economy can increase living standards and prosperity.

Insufficient inclusion has disproportionate effects

Unequal opportunities for all citizens and places to contribute and benefit from economic growth disproportionately affect women, racial and ethnic minorities, and certain communities. The effects of the current pandemic may have increased this further.

Insufficient inclusion has disproportionate effects

Inequality is self-reinforcing

Gaps in economic opportunity have grown. Income inequality worsens wealth inequality. Black and Hispanic families are less likely to own homes and have much lower average retirement savings. Inequality and economic exclusion persist across generations because lower living standards constrains education, skills and access to labour markets, which limits social and economic mobility. At the same time, community investment and infrastructure development are often lower in underserved populations.

US median family wealth for black/hispanic households

Equity is being increasingly integrated into public policy

Public- and private-sector leaders are increasingly integrating equity into their policy and growth strategies. Greater community investment, for example, improving public social sector goods and services such as health and education, opening channels for greater participation in the financial system, developing inclusive business development strategies, and addressing wage gaps, can improve economic opportunity and participation, and living standards and growth. In turn, this will affect the financial system and the long-term risk and return of financial assets.

Combining economic and social policy to achieve inclusive growth

Social-, equity-, and inclusive-related policies are increasingly evident in the following economic sectors.

  1. Financial inclusion Competitive fiscal and monetary policy; economic savings; access to credit, banking and financial products.
  2. Business-led productivity and quality jobs Inclusive industrial strategies; opportunities for private entrepreneurship; access to capital and scaling-up businesses
  3. Human capital Creating quality jobs, wage gaps; skills development; access to high quality goods and services
  4. Physical infrastructure Connecting citizens to economic assets and opportunities, via housing, transport, and digital services
  5. Community infrastructure Investment in public sector social goods and services, e.g., education, health, affordable childcare

Being an agile investor

An active investor will need to track each of the effects from policy changes designed to address disparities in economic opportunity, including the risk of policy failure, and take a position on each. We are developing economic and investment tools that will help investors understand and manage inherent risk and opportunity – across financial inclusion, health, education, and community sectors – to benefit from the potential value of this new social and economic investment and/or provide finance to create positive social impact.

The other two sections of this report are available here: Overview, prosperity and climate transition.


This document was prepared for general information purposes only and should not be considered a substitute for specific professional advice. In particular, its contents are not intended by Willis Towers Watson to be construed as the provision of investment, legal, accounting, tax or other professional advice or recommendations of any kind, or to form the basis of any decision to do or to refrain from doing anything. The information included in this presentation is not based on the particular investment situation or requirements of any specific trust, plan, fiduciary, plan participant or beneficiary, endowment, or any other fund; any examples or illustrations used in this presentation are hypothetical. As such, this document should not be relied upon for investment or other financial decisions and no such decisions should be taken on the basis of its contents without seeking specific advice.

This document is based on information available to Willis Towers Watson at the date of issue, and takes no account of subsequent developments. In addition, past performance is not indicative of future results. In producing this document Willis Towers Watson has relied upon the accuracy and completeness of certain data and information obtained from third parties. This document may not be reproduced or distributed to any other party, whether in whole or in part, without Willis Towers Watson’s prior written permission, except as may be required by law.

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