Developing Countries and Economies in Transition: The Nexus between Economic Growth and Income Inequality

2015 ◽  
Vol 61 (2) ◽  
pp. 155-174
Author(s):  
Fadi A. Fawaz ◽  
Masha Rahnama ◽  
Victor J. Valcarcel
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Income Inequality ◽  
Economies In Transition

scholarly journals Economic Growth and Income Inequality in Developing Countries

2015 ◽  
Vol 9 (6) ◽  
pp. 79-82 ◽  
Author(s):  
Morteza Nemati ◽  
Ghasem Raisi
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Income Inequality ◽  
Income Distribution ◽  
Economic System ◽  
Development Strategy ◽  
Low Income ◽  
Poverty Eradication ◽  
The Relationship ◽  
Selection Of

Nowadays, improvement in income distribution and poverty eradication and hence low inequality are served as the main objectives of economic and social development strategy even prior than primary tasks of governments. to manifest importance of income distribution, some economists adopt income inequality and income distribution in society as criteria for economic system of the community, although these criteria and measures are theoretical for the economic system and this varies from the perspective of different people, however, it denotes on  importance of income distribution among individuals. The main objective of this study was to evaluate the effect of economic growth on income inequality in the selection of low-income developing countries.To this end, using panel data and data for 28 developing countries over the period 1990-2010 the relationship between GDP and the Gini coefficient was examined. The results indicate that as per hypothesis Kuznets in the early stages of growth, income inequality increases and then it declines in later stage.

scholarly journals How do Poverty and Income Inequality affect Economic Growth in Developing Countries?

2021 ◽  
Vol 4 (2) ◽  
pp. 547-558
Author(s):  
Hamza Saleem ◽  
Fatima Farooq ◽  
Muhammad Aurmaghan
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Panel Data ◽  
Income Inequality ◽  
Negative Impact ◽  
Positive Impact ◽  
Development Indicators ◽  
The Relationship ◽  
Positive Effect ◽  
World Development

The major objective of this research is to examine the relationship between poverty, income inequality and economic growth from some selected developing countries. This study uses panel data for the period of 2002-2015. All the data is taken from world development indicators (WDI). To find out the results, we have used Hausman test an econometrics technique for panel data in this research. The results of the study indicate that poverty and income inequality have a negative impact on economic growth on the other hand Gross capital formation, labor force, total population and government consumption and expenditure have a positive impact on economic growth. The result tells us that changes in these variables have a significant and positive effect on the dependent variable. To achieve the goal of economic growth developing countries should reduce poverty and take meaningful steps to overcome the problem of inequality in the society which can be very helpful in achieving the goal of economic growth.

The impacts of sector growth and monetary policy on income inequality in developing countries

2019 ◽  
Vol 46 (3) ◽  
pp. 591-610 ◽  
Author(s):  
Sima Siami-Namini ◽  
Darren Hudson
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Monetary Policy ◽  
Panel Data ◽  
Income Inequality ◽  
Nonlinear Effect ◽  
Service Sector ◽  
Functional Form ◽  
Content Type ◽  
The Relationship

PurposeThe purpose of this paper is to explore the effect of growth in different sectors of the economy of developing countries on income inequality and analyze how inflation, as a proxy for monetary policy, makes a proportionate contribution for setting a binding national target for reducing income inequality. The paper examines the existence of a linear or nonlinear effect of inflation and sectoral economic growth on income inequality using a balanced panel data of 92 developing countries for the period of 1990–2014.Design/methodology/approachMethods section includes several steps as below: first, the functional form of the model using panel data for investigating the contribution of economic sectors in income inequality; second, to estimate the relationship between income inequality and sector growth: testing the Kuznets hypothesis; third, to estimate the relationship between inflation and income inequality base on general functional form of the model proposed by Amornthum (2004); fourth, a panel Granger causality analysis based on a VECM approach.FindingsThe statistically significant finding shows that first agricultural growth and then industrial growth have a dominate impact in reducing income inequality in our sample. But, the service sector growth has positive effects. The results confirm the existence of Kuznets inverted “U” hypothesis for industry growth and Kuznets “U” hypothesis for service sector growth. The findings show that sector growth and inflation affect income inequality in the long-run.Originality/valueThis research is an original paper which analyzes the effect of growth in different sectors of the economy of developing countries (agriculture, manufacturing and services sectors) on income inequality and test the Kuznets hypothesis in terms of sector growth and at the same time, examine the existence of a linear/nonlinear effect of inflation and sectoral economic growth on income inequality and test Granger causality relationship between income inequality and sector growth and inflation.

scholarly journals Governance and Income Inequality

2006 ◽  
Vol 45 (4II) ◽  
pp. 751-760 ◽  
Author(s):  
Saima Shafique ◽  
Rashida Haq
Keyword(s):  
Economic Growth ◽  
Growth Rate ◽  
Developing Countries ◽  
Economic Policy ◽  
Income Inequality ◽  
Income Distribution ◽  
Growth And Development ◽  
Well Being ◽  
Low Level ◽  
The Poor

Major problems of developing countries are unequal income distribution and low growth rate, which affect their welfare aspects. It was implicitly assumed that whenever we achieve target of higher growth rate, benefit of growth would automatically trickle down to the poor. History of developing countries shows that the rich benefited more than the poor as evidenced by rising income inequality during the period of higher economic growth. The economic policy changes are often triggered by the logic of low level of equilibrium of output level, employment and income distribution. To overcome this low level of equilibrium trap, government often adopt polices so as to achieve high level of income and employment growth and development, and equitable income distribution. Coherent policy instruments are essential to meet these policy targets. Impact of any macro economic policy has been examined by studying its impact on economic growth and income distribution. In recent years polices have been directed toward reducing the level of poverty and inequality through raising quality of life in society by providing efficient and effective governance. This new economic philosophy has resulted in a massive change in the policy orientation of countries; the priority is now centred on issue of governance and focus is now shifted towards a qualitative nature of its growth and development. According to Sen (1983), the realisation of human capabilities, that enlarge the range of human choices, is essential for a broader notion and measure of economic well-being. The institutional frame work is then considered as one of the essential elements for translating growth and well-being into a sustainable process.

scholarly journals Assess the Impact of Foreign Direct Investment on Local Investment

2020 ◽  
Vol 6 (8) ◽  
pp. 173-178
Author(s):  
I. Mamatkulov
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Economies In Transition ◽  
Effective Use ◽  
The Impact

The article presents an overview of research on the essence of foreign direct investment. At the same time, the impact of foreign direct investment on economic growth in developing countries and countries with economies in transition is analyzed optimistically in the study. Based on the analysis and research, scientific conclusions were formed on the effective use of foreign direct investment in Uzbekistan. Based on these findings, relevant suggestions and recommendations were made.

scholarly journals Inequality and economic growth in Bangladesh–a diversified evidence on Kuznets pattern `U` hypothesis

1970 ◽  
Vol 7 (1) ◽  
pp. 117-123
Author(s):  
SMA Islam
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Income Inequality ◽  
Low Income ◽  
Structural Adjustment ◽  
National Level ◽  
Low Income Countries ◽  
Poor People ◽  
Kuznets Hypothesis ◽  
The Government

The study of inequality and economic growth to the developing countries are now a days a comprehensive issue since the growth stimulate the standard of living to the poor people and accordingly reduce income inequality. The improvement of inequality and growth may reduce the social movement to the government and may keep the economic and social integrity amongst the different ethnic groups by efficient resource allocation and income redistribution in Bangladesh. The objective of this research is to assess long term relationship between inequality and growth in Bangladesh with a methodology of Kuznets pattern inverted U hypothesis first introduced by Simon Kuznets since 1955. The popular concept of Kuznets hypothesis suggests that as economic growth occurs, income inequality first increase and then decline after a certain turning point. The study of Kuznets hypothesis is popular to the international economic environment rather than domestic, especially to the developing countries where the per capita GDP is below the level of world average. This study found the evidence that the presumption of Kuznets hypothesis has satisfied in the economy of Bangladesh in national level. In low income countries, structural adjustment is necessary to satisfy the Kuznets hypothesis. Keywords: Kuznets Hypothesis; Inequality; Growth DOI: 10.3329/jbau.v7i1.4973 J. Bangladesh Agril. Univ. 7(1): 117-123, 2009

scholarly journals Economic Complexity and Poverty in Developing Countries

2021 ◽  
Author(s):  
Sena Kimm Gnangnon
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Income Inequality ◽  
Growth Rates ◽  
Policy Implications ◽  
Export Demand ◽  
Financial Flows ◽  
Economic Complexity ◽  
Economic Growth Rates ◽  
Growth Volatility

This paper has examined the effect of economic complexity on poverty in developing countries. The analysis has used a sample of 84 countries over the period 1980-2017. Results indicate that greater economic complexity results in lower poverty headcount rates. This is particularly the case for countries that enjoy higher economic growth rates, lower levels of income inequality and lower degrees of economic growth volatility, including due to lower sizes of export demand and financial flows shocks. These findings have important policy implications for developing countries that are exploring ways and means to recover from the current COVID-19 pandemic crisis, and prepare for future crises.

scholarly journals Economic Growth and Income Inequality Relationship: Role of Credit Market Imperfection

2008 ◽  
Vol 47 (4II) ◽  
pp. 727-743 ◽  
Author(s):  
Amina Tabassum ◽  
M. Tariq Majeed
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Income Inequality ◽  
Latin American ◽  
Low Income ◽  
Growth Rates ◽  
Poverty Reduction ◽  
Sub Saharan Africa ◽  
Average Growth ◽  
Income Inequalities

The 20th century has witnessed unequalled success in improving the living standard of people in most part of the world. According to World Bank annual Statistical reports, poverty has declined significantly in developing countries over the past twenty years but the progress has been uneven. The number of people living in poverty fell from 1.5 billion in 1981 to 1.1 billion in 2001. However, many low-income developing countries are still trapped in vicious circle of poverty. In Sub-Saharan Africa, the number of poor rose from 41 percent to 46 percent between 1981 to 2001.While in Eastern Europe and Central Asia, the numbers of poor people have risen to around 20 percent in 2001.1 Therefore; reduction of widely scattered poverty is the most challenging goal for low income developing countries. Economic growth is considered to be a powerful force for reducing poverty. High and sustained economic growth increases the labor demand and wages which in return will reduce poverty. Similarly, better earnings as a result of reduction in poverty lead to increase productivity and growth. But the extent of poverty reduction as a result of economic growth depends on how the distribution of income changes with economic growth and on initial Inequalities in income. If income inequality increases, then economic growth does not lead to a significant poverty reduction. Many developing countries achieved high growth rates in different periods but poverty does not reduce significantly in these periods due to increase in income inequalities. Most South and East Asian economies grew at higher per capita rates since early 1970 along with rise in income inequality over time. In contrast, Latin American countries grew by less than the half of average growth rates in South and East Asia while maintaining high income inequality.2 The differences in income inequality at a given rate of growth require that efforts to reduce poverty by stimulating growth are not sufficient and need to be complemented by efforts to reduce income inequalities.

scholarly journals Income Inequality and CO2 Emissions in Developing Countries: The Moderating Role of Financial Instability

2020 ◽  
Vol 12 (17) ◽  
pp. 6810
Author(s):  
Bo Yang ◽  
Minhaj Ali ◽  
Shujahat Haider Hashmi ◽  
Mohsin Shabir
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Income Inequality ◽  
Co2 Emissions ◽  
Fossil Fuel ◽  
Trade Openness ◽  
Financial Instability ◽  
Interaction Term ◽  
Moderating Role

This paper studies the effects of income inequality and financial instability on CO2 emissions in the presence of fossil fuel energy, economic development, industrialization, and trade openness. Moreover, the present study is the first to examine the moderating role of financial instability between income inequality and CO2 emissions. We utilized panel data of forty-seven developing countries for the period 1980–2016 by utilizing the stochastic impacts by regression on population, affluence, and technology (STIRPAT) model. The empirical outcomes in all models indicate that income inequality and industrialization significantly reduce environmental degradation, while fossil fuel, trade openness, and economic growth decrease the quality of the environment. However, financial instability (without interaction term) shows no significant link to environmental quality, whereas (with interaction term) it shows a significant negative effect on CO2 emissions. In addition, the result of the interaction variable reveals that an increase in inequality, ceteris paribus, in combination with the rise in financial instability, is expected to increase pollution. Furthermore, there exists a bidirectional causal association among income inequality, financial instability, fossil fuel, trade openness, industrialization, economic growth, and the interaction variable with CO2 emissions.

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