The Imperative of Social Development in Emerging Markets: India and Indonesia’s Cases

The EMI D-ESG Country Ranking Framework offers a set of metrics that assess the environmental, social, and governance (ESG) capabilities of emerging market economies to provide a holistic evaluation of these economies’ progress and challenges.

As part of the ongoing “In Search of an ESG Framework for Emerging Markets” series, we look at social challenges like poverty and extreme poverty in emerging markets, where rapid economic growth often outpaces social infrastructure development, creating or widening disparities in education, healthcare, and income.

Governments and companies across emerging markets are working to address these social challenges through initiatives aimed at fostering inclusive development. India saw 415 million people exiting extreme poverty within a span of 16 years (2005-21). About 69 million people were lifted out of poverty in China (2010-14), and 8 million emerged from poverty in Indonesia (2012-17), as reported by the United Nations Development Programme (UNDP).

Addressing social inequalities has supported sustainable long-term growth and development in these regions. In this exploration, countries like Indonesia and India leverage specific social programs to tackle immediate challenges while laying the foundation for sustained economic and social well-being.

The social aspect in emerging economies is measured through a range of indicators that assess the overall well-being and equity within a population. These indicators encompass key areas including health, education, poverty, and social unrest:

• Health is measured by life expectancy and infant mortality rates, which reflect the quality of healthcare and living conditions.
• Education is evaluated through metrics like the mean years of schooling, which show the population’s educational attainment and access to learning opportunities.
• Poverty is measured through poverty headcount ratio, gender gap, income inequality (Gini Index), unemployment rate, and the share of informal employment; these metrics capture the economic challenges and disparities faced by the population.
• Social unrest is gauged by the intentional homicide rate, indicating levels of crime and societal stability.

These indicators provide a holistic view of social progress, highlighting areas where countries are improving or struggling in their pursuit of sustainable, inclusive development.

India and Indonesia have demonstrated progress in the social dimension between 2012 and 2022. These emerging economies serve as compelling case studies of effective social programs. They’ve enhanced their social ecosystems, showcasing markedly positive shifts in their social landscapes.

The dual perspective of the framework—combining current standing scores and growth scores—provides a comprehensive view of social progress across different emerging nations. It underscores the importance of considering both established social foundations and recent developmental momentum when evaluating countries’ social performances.

At Cornell University’s Emerging Markets Institute (EMI), the EMI D-ESG Framework, published in the 2022 Emerging Market Multinationals Report, provides a way to measure sustainable growth that is inclusive, environmentally friendly, and focused on governance. This is part of an EMI D-ESG Framework series available on the Social Science Research Network (SSRN):

• In Search of an ESG Framework for Emerging Markets: What About Growth?
• In Search of a D-ESG Framework for Emerging Markets: What About Environment? Latin America, A Green Power
• In Search of an ESG Framework for Emerging Markets. What About Social Challenges? The Case of Nigeria, India and Indonesia

About the authors

Shailja Bang Shah is the head of research at Portulans Institute. She specializes in thematic research and managing composite indices. She coauthored the EMI D-ESG Country Ranking 2022 and focuses on sustainable development in emerging markets. She previously worked at J.P. Morgan in geopolitical and macroeconomic research.

Lourdes Casanova is a senior lecturer and the Gail and Rob Cañizares Director of the Emerging Markets Institute in the Cornell SC Johnson College of Business and a coauthor of the EMI Reports.

Anne Miroux is a faculty fellow at the Emerging Markets Institute and coauthor of the EMI Reports. She has 30 years’ experience at the United Nations Conference on Trade and Development (UNCTAD).

Oritsemolebi Adebiyi MBA ’24 is a strategy and transactions consultant at EY-Parthenon, specializing in strategic growth, sustainability integration, and transformative business initiatives for global organizations. She previously was a financial controller and management consultant at PwC, where she led financial strategy and operational efficiency projects.