Dynamics of Inclusive Prosperity
Working on sustainable prosperity
Greater prosperity increases stability within a society. Wealthy countries generally have a high level of social security, good quality health care, good education and offer numerous opportunities for personal development. At the same time, growing prosperity also results in abuse, environmental degradation and social crises. All over the world, social inequality and youth unemployment are rising and women are paid less than men for the same jobs.
The Erasmus Initiative ‘Dynamics of Inclusive Prosperity’ focuses on enabling as many people as possible to benefit from increasing prosperity, whilst minimising the negative consequences. Increased prosperity requires constant coordination of the changing needs and values of governments, businesses, citizens and entrepreneurs. In order to chart this dynamic field, scholars from Erasmus School of Law, Rotterdam School of Management and the Faculty of Philosophy are entering into a multidisciplinary partnership.
Global phenomena – such as the emergence of the sharing economy with companies like Airbnb and Uber, the aftermath of the financial crises and tax evasion by large companies – create a whole series of new business, philosophical and legal questions. With the shift in roles and responsibilities within the public and private domains, the traditional image of a regulatory government facing an innovative industry seems less and less accurate.
Dynamics of Inclusive Prosperity
“With this Erasmus Initiative, Erasmus University is developing an international centre of expertise for inclusive prosperity. This can make an important contribution to both the social and academic debate and policy-making,” says Professor Suzan Stoter, the dean responsible for this initiative.
The research has three themes:
Balance between public and private responsibilities
The boundaries between public and private regulation are becoming increasingly blurred. In recent decades, we have seen increasing self-regulation within the private sector, while the government is seeking to build new partnerships with the private sector to arrive at tighter regulation.
This development produces various questions and dilemmas. Since public regulation and private regulation work in fundamentally different ways, one could wonder whether the two can actually be reconciled. Is the private sector a suitable party to control its own socially responsible behaviour? Another question concerns the effectiveness and operation of the various forms of regulation. Now that not only the government, but also the market and social movements are starting to regulate, we see that besides inspection and enforcement, financial incentives, boycotts and social pressure are also having a regulatory effect.
Furthermore, very little research has been done into the effectiveness of regulation by many parties. With the rise of new multinational corporations that are active across the globe, we can see a flurry of new developments in the field of regulation. Although many transnational quality marks and certifications are being created, little is known about the effects of such measures.
Opportunities and risks of start-ups and technological developments
Start-ups and technological developments are rapidly changing society and the market. What do we mean today by ‘disruptive innovation’, and what are the consequences of these developments for society? Are the differences becoming greater or are they actually contributing to equality? Since these innovations are distinguished by their disruptive character, regulation has often proven problematic and goals like stability and sustainability are coming under pressure. In sectors ¬where there is a great deal of disruptive innovation and where the consequences may be dramatic – like finance, automation and robotisation or in marketing in the private and public domains – it will be necessary to perform dedicated research.
The role of the financial sector
Within the financial system, markets, banks and institutional investors (such as pension funds) influence each other. The question is how a financial system can best be arranged and regulated to create an inclusive economy that promotes prosperity.
Problems in the financial sector can lead to economic depression and unemployment. In the past, financial innovations have often proven to be at the expense of financial stability. Because of the complexity of the financial sector, regulation often falls short of the mark and governments are unable to prevent major problems. At the same time, financial innovations don’t just create risks; they also create new opportunities like crowd funding, microcredits and risk management. How can these innovations be used to stimulate inclusive prosperity?
For a better understanding of the world of finance, it is essential to gain insight into the motives and behaviour of bankers and traders as well as of households and other actors in this sector. For that reason, multidisciplinary research that looks beyond mere economic factors is required. In addition, international institutions such as the World Trade Organization (WTO), the World Bank, the International Monetary Fund (IMF) and the European Banking Union are important players in the financial sector. How can these institutions contribute to inclusive prosperity?
Dr. Jeroen Timmermans