Insurance and Inclusive Growth

While the real sector and governments
(along with a few micro economists) have long recognized the
core economic role that the insurance function plays, the
mainstream economics profession has largely treated it as
invisible background. This literature review of the relevant
research, most of which has been carried out in the past few
decades, demonstrates that the insurance sector contributes
at a basic level to inclusive economic growth and the
effectiveness of the credit function. It also shows that the
latter impact may be particularly fundamental in assisting
the poor to avoid poverty traps and to progress
economically. However, the research and the theoretical
models underpinning it also highlight certain constraints to
the efficient utilization of the insurance function. The
literature dealing with innovations designed to overcome
these constraints is reviewed and successful initiatives and
remaining challenges are identified.