Sustainable economic development—economic progress that improves quality of life while preserving resources for the future—is a matter of importance and urgency for everyone.
In support of economic growth, governments and companies alike need a sustainable, comprehensive approach to economic development—one that helps them navigate economic challenges such as global crises and conflicts, natural disasters, inequality, and policy changes.
Below, we focus on three main approaches to support sustainable economic development: BCG's Sustainable Economic Development Assessment (SEDA), job creation and employment, and financial inclusion.
BCG’s Sustainable Economic Development Assessment (SEDA) reveals that countries can, in fact, do both. The tool provides insight into the relative well-being of a country’s citizens and how effectively that country converts wealth—based on three fundamental elements to measure income levels—into well-being.
The first element is economics, which includes income, economic stability, and employment dimensions. The second element, investments, encompasses education, health, and infrastructure, which account for much of government budgets. The third element covers two aspects of sustainability: social inclusion—including income equality, civil society, and governance—and environment.
Labor, employment, and social services can have one of the largest direct impacts on sustainable economic development and well-being. Government has an important role to play in matching people's skills and experience to the jobs of today and tomorrow, and ensuring that no talent is wasted and no job is left unfilled.
Another lever for improving job creation and GDP growth is foreign direct investment (FDI), which contributes to a virtuous circle toward improving a nation’s competitiveness. A nation’s ability to attract, maintain, and accelerate FDI can have a profound impact on many aspects of the local economy, including:
• A boost in productive capital resulting in higher output and more jobs
• Improved access to previously unavailable export markets
• New technologies and management skills
Financial inclusion—the adoption, usage, and sustainability of financial services—has a proven positive correlation to economic development. By allowing people to transact more efficiently, save, invest, and be insured, their standard of living and well-being improves; family prosperity and GDP growth increases; and poverty decreases.
Building financial inclusion is a multiyear journey. To succeed, we recommend the following four steps:
Unleashing Innovation in Middle Billion Economies
The digital revolution presents huge opportunities for developing nations that have the right strategies and can mobilize their entrepreneurs and pools of hidden innovators.
Measure Well-Being to Improve It
Governments need a dashboard—one that tracks not just economic growth but also citizens’ well-being and happiness levels—in order to understand how their performance stacks up.
SEDA: An Interactive Guide
Explore the SEDA interactive to find out how countries stack up when it comes to the well-being of their citizens—and which nations are making the most progress.
The Ultimate Competitive Test: Jobs
In his LinkedIn blog, BCG’s David Young explains how a company’s job-creation strategy can lead to better ways of working for their employees.
Getting the Best of Both Worlds: Economic Growth and Societal Well-Being
BCG’s Vincent Chin explores how well-being of people can progressively lead countries to post higher economic growth.
How 300 Companies Integrated 2,500 Refugees into Germany’s Labor Market
The results were largely positive. What can other countries learn from Germany’s experience?
How to Create and Sustain Financial Inclusion
BCG’s new tool can help countries, financial institutions, and NGOs improve financial inclusion.
BCG's unique approach is helping significantly reduce long-term unemployment in Germany.
BCG's consultants and industry experts focusing on economic development continue to partner with leading social organizations, governments, corporations, and nonprofits to support economic growth, job creation, financial inclusion, and well-being. These are some of our experts on this topic.
Managing Director and Senior Partner, Head of Africa
Managing Director & Partner