Developing a novel inclusive policy analysis framework based on capability approach and institutional analysis and development method

Abstract This paper develops a novel framework to measure inclusive policy based on capability approach and institutional analysis and development method. In the process, it records its distinction of inclusive growth from earlier growth theories, particularly highlighting its economic and non‐economic dimensions. The paper inculcates consequential ethics in discussing inclusive growth. The proposed framework is conceptualised on the theoretical foundation of Amartya Sen's capability approach and Elinor Ostrom's IAD method. The framework allows theorists to develop more precise theories and models and derive empirical analysis of existing and proposed policies. The paper identifies the major limitations of the existing inclusive policy analysis methods which include disregarding the ‘noneconomic dimensions of inclusive growth’ (benefit share, participation, equality of opportunity). The existing methods endorses equality of opportunity from an arbitrary point to wrongly fulfil the inclusiveness dimension. Such an approach fails in sustaining moral and ethical rightness of equity. Further, the excising methodologies do not disclose the precise time of change in opportunities among the target population resulting into waste of policy resources. The proposed framework's novel contribution is integrating CA and IAD method to reveal the precise time of change in opportunity that occurs over time due to policy implementation. The framework will help policy makers to measure policy outcome and reduce waste of resource. Analysts and researchers can apply framework for empirical analysis to identify the inclusive growth policy or compare inclusive policy between various countries, states, and regions.