Eurozone countries could boost growth and employment by tackling more “inclusive” reforms to their economies, a study by the European Central Bank (ECB) said on Friday.
“Well-designed structural policies could yield substantial benefits for euro area citizens via a stronger and more inclusive growth in employment and incomes,” the authors said.
The working group that produced the study was set up by the ECB two years ago.
Since that time, “inclusive” growth has become a buzzword widely used at international gatherings, such as the G20, and organizations such as the Organisation for Economic Co-operation and Development (OECD) and IMF.
Political and economic elites have increasingly turned their attention to inequality as they scramble to understand the surge in anti-establishment politics and seismic events such as Brexit or the election of US President Donald Trump.
“There is an increasing perception that growth in the past has not been sufficiently inclusive, and was not always associated with rising living standards for everyone,” ECB President Mario Draghi said last year.
“This has fueled the belief that some have been ‘left behind’ by the spread of market forces,” he said.
The report’s authors said countries should pursue reforms to reduce “rent-seeking” — economic actors taking advantage of weak competition to fleece consumers.
They also urged changes to public institutions to squeeze out corruption and tax avoidance.
Both moves would “not only support growth, but also enhance equity, social trust and social fairness,” the researchers said.
However, there is no one magic formula that can be applied to all 19 countries in the eurozone, the authors said.
“Structural changes need to be country-specific and tailor-made to reflect the specific national starting conditions in terms of economic structures and institutions, as well as social preferences,” they said.
Separately, Greek Prime Minister Alexis Tsipras on Friday pledged to keep to agreed reforms and budget targets after international creditors announced debt relief measures to wean the country off its eight-year bailout program, which ends in two months.
Greek bond markets rose on the news of the deal, leading to a drop in the government’s borrowing rates. The yield on Greece’s benchmark 10-year bond eased 0.2 percentage points to 4.1 percent. The main stock index was up 1 percent in midday trading.
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