The Economics of Belonging: Why Inclusion is More Than Policy

 

In recent years, the terms inclusion, diversity, and belonging have become common in policy documents, corporate boardrooms, and academic circles. Yet, beyond the buzzwords lies a deeper truth: inclusion is not merely a matter of social justice; it is a powerful economic force. The economics of belonging reminds us that societies thrive not simply when they pass inclusive policies, but when individuals feel included in the first place.

What Do We Mean by "Belonging"?

Belonging goes beyond representation or access. It is the psychological experience of being accepted, valued, and recognised within a society or organisation. It is when a person can say, “This place is for people like me.”

For economists and sociologists, this concept may seem abstract, but its impacts are concrete and measurable. Belonging affects productivity, educational attainment, health outcomes, innovation, and civic participation. In short, a society where more people feel they belong is also one where more people contribute.

From Social Inclusion to Economic Integration

Many countries, especially emerging economies, have taken strides toward inclusive development. Policies have aimed at uplifting marginalised communities, be it through reservations, welfare schemes, or affirmative action. But often these policies fall short of creating true belonging. Why?

Because inclusion is not simply about being allowed into a space—it’s about being welcomed, heard, and valued within it.

Take the labour market, for instance. Women, persons with disabilities, LGBTQ+ individuals, and members of historically disadvantaged castes may now have the legal right to work. But are they promoted, mentored, and supported? Do they have a sense of psychological safety at work? If not, the economic benefits of their participation remain underutilised.

The Cost of Exclusion

1.     Exclusion is expensive. It leads to lower labor force participation, underemployment, poor educational outcomes, and lower lifetime earnings. Moreover, it perpetuates intergenerational poverty.

2.     Consider this: McKinsey Global Institute estimates that closing gender gaps in the workforce could add $12 trillion to global GDP by 2025. Similarly, the underutilization of racial and caste minorities, refugees, or informal workers leads to enormous opportunity costs.

3.     On a national level, social exclusion erodes trust in institutions, reduces tax compliance, and fuels social unrest all of which are harmful to economic growth.

Belonging as an Economic Strategy

A growing body of research reveals that inclusion enhances innovation. When diverse perspectives are truly heard and integrated, businesses develop more creative solutions, and governments design more effective policies.

In the public sector, inclusive governance leads to better service delivery and higher citizen engagement. Economically, belonging fosters:

• Greater workforce productivity
• Lower attrition and absenteeism
• Stronger consumer trust and brand loyalty
• A more resilient and cooperative society

In other words, belonging is not a moral accessory; it’s an economic necessity.

Reimagining Policy Through the Lens of Belonging

To unlock the economics of belonging, policies must go beyond access. They must:

• Address structural biases in recruitment, education, and governance
• Promote inclusive leadership in both public and private sectors
• Invest in community-building, not just infrastructure
• Measure success not only through GDP, but also through wellbeing, trust, and equity

Countries like New Zealand, which now measure “wellbeing” alongside economic indicators, or Bhutan with its Gross National Happiness model, signal a shift in how we understand development. These approaches prioritize human connection, dignity, and belonging.

Conclusion: Building Economies Where Everyone Belongs

The true test of a progressive economy is not how fast it grows, but how widely the fruits of that growth are shared. Inclusion without belonging risks being performative. But when societies commit to creating spaces where all individuals can truly thrive, they unlock innovation, prosperity, and peace.It is time we expand our economic lens to include the emotional and psychological aspects of development. Because when more people feel they belong, more people will believe in the future, and work to build it.

Dr. Chelpuru Madhu

Post-Doctoral Fellow, School of Economics, University of Hyderabad

P. Nagaraju

Senior Research Fellow