With the experience of major African economies showing that the benefits of growth at the top are not trickling down to the poor, it is time for innovative economic alternatives such as impact investing to show the way forward for inclusive growth.
Trickle-down has no effect
There was a time when ‘trickle down’ was the favourite word in the lexicon of economists worldwide. According to this theory, as long as an economy is growing, the benefits will eventually make their way through the system.
For the proponents of trickle-down economics, the belief was that rising incomes at the top end of the spectrum would lead to more jobs, less poverty and higher incomes at the lower end – much like a rising tide lifts all boats. However, over time, it has proven to be a fallacy, just like any other belief in equitable wealth distribution as a natural course of events.