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Achieving both Economic Growth and Reduced Income Inequality and Poverty
35. As indicated above, the GES makes it clear that our Purpose is to provide opportunities for all of Scotland to flourish through increasing sustainable economic growth. That is why we have made equity one of our strategic priorities in the GES and why we have developed a set of Golden Rules to determine the characteristics of growth.
36. Experience from other countries shows us that this is a difficult dual goal to achieve. While a number of countries, particularly the Arc of Prosperity 3 countries which surround Scotland, have achieved higher economic growth in the last decade or so, this has not always been achieved alongside reduced income inequality or poverty. For example, while Ireland achieved an average GDP growth rate of 6.8% between 1998-2005, over the same period poverty actually increased by 2%, while income inequality hardly changed.
37. International experience therefore tells us that while it is possible to achieve strong economic growth and reduce poverty and income inequality, countries that achieve all three over the medium term are the exception rather than the rule. In addition, work undertaken by the Joseph Rowntree Foundation 4 found that the poorest 25% in society have benefited less than the rest of society from the increase in UK prosperity over the last 20 years. We will therefore need to consider carefully how we can achieve balanced progress on all 3 indicators of success.
38. We will be doing further international comparative work to consider what other countries can teach us about balancing growth and greater equality and will share this with consultees during the consultation process.
39. The central question on which we want to seek people's views is therefore: how best can we achieve economic growth and reduced poverty and income inequality in Scotland? What policies are key within the existing powers available to the Scottish Government? Who are the key actors who we must influence to ensure we achieve all of our goals? What role might the private sector play in helping to achieve this aspiration?
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