Economic growth, poverty and inequality revisited

The paper inspects the dynamics of economic growth, poverty and income inequality in different countries over time. The experience with economic growth and inequality show that both absolute and relative inequalities in expenditure/income have increased in several Asian countries over the last decad...

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Главные авторы:	Rahman, Sultan Hafeez, Mukhopadhay, Hiranya
Формат:	Working Paper
Язык:	en_US
Опубликовано:	BRAC Institute of Governance and Development (BIGD) 2022
Предметы:	Economic growth Income inequality South Asia Policy
Online-ссылка:	http://hdl.handle.net/10361/15917

id	10361-15917
record_format	dspace
spelling	10361-159172022-01-16T21:01:29Z Economic growth, poverty and inequality revisited Rahman, Sultan Hafeez Mukhopadhay, Hiranya Economic growth Income inequality South Asia Policy The paper inspects the dynamics of economic growth, poverty and income inequality in different countries over time. The experience with economic growth and inequality show that both absolute and relative inequalities in expenditure/income have increased in several Asian countries over the last decade with the growth of the economy. Even though some level of poverty reduction was gained from economic growth, the growth is more advantageous for the rich in terms of education, occupation, nutrition, health and other public policies. This inequality has increased due – to the uneven growth in some sectors and some locations; the rapid increase in returns to higher education, skilled workers and employment; and the shift from a dominant socialist ideology to a more market-oriented economy. Inequality not only slows down the pace of poverty reduction for a given economic growth but also is a probable threat to sustainable economic growth. However, there are debates regarding the relationship between growth and inequality, especially on the form of the functional relationship between them. This paper tries to estimate this relationship without imposing any a-priori restriction on the functional relationship, and so the local polynomial (non-parametric) regression is employed. World Bank’s data on Gini index concerned with average index from 2003-2007 and annual percentage of the growth rate of GDP from 2008-2010 for 96 countries from Asia, Latin America, Africa and Europe were used to for this purpose. The non-parametric regression determines an inverted U-shaped relationship between inequality and growth, and the result is later confirmed by a cross-country parametric regression. So, the countries on the left side of the inverted-U curve, such as South Asian countries, have a positive relationship between inequality and growth, and vice-versa. The results show that rising income inequality in many Asian countries could be counterproductive for sustaining high growth, and outlines possible policy responses. 2022-01-16T04:45:04Z 2022-01-16T04:45:04Z 2015 2015-09 Working Paper http://hdl.handle.net/10361/15917 en_US https://bigd.bracu.ac.bd/publications/economic-growth-poverty-and-inequality-revisited/ application/pdf BRAC Institute of Governance and Development (BIGD)
institution	Brac University
collection	Institutional Repository
language	en_US
topic	Economic growth Income inequality South Asia Policy
spellingShingle	Economic growth Income inequality South Asia Policy Rahman, Sultan Hafeez Mukhopadhay, Hiranya Economic growth, poverty and inequality revisited
description	The paper inspects the dynamics of economic growth, poverty and income inequality in different countries over time. The experience with economic growth and inequality show that both absolute and relative inequalities in expenditure/income have increased in several Asian countries over the last decade with the growth of the economy. Even though some level of poverty reduction was gained from economic growth, the growth is more advantageous for the rich in terms of education, occupation, nutrition, health and other public policies. This inequality has increased due – to the uneven growth in some sectors and some locations; the rapid increase in returns to higher education, skilled workers and employment; and the shift from a dominant socialist ideology to a more market-oriented economy. Inequality not only slows down the pace of poverty reduction for a given economic growth but also is a probable threat to sustainable economic growth. However, there are debates regarding the relationship between growth and inequality, especially on the form of the functional relationship between them. This paper tries to estimate this relationship without imposing any a-priori restriction on the functional relationship, and so the local polynomial (non-parametric) regression is employed. World Bank’s data on Gini index concerned with average index from 2003-2007 and annual percentage of the growth rate of GDP from 2008-2010 for 96 countries from Asia, Latin America, Africa and Europe were used to for this purpose. The non-parametric regression determines an inverted U-shaped relationship between inequality and growth, and the result is later confirmed by a cross-country parametric regression. So, the countries on the left side of the inverted-U curve, such as South Asian countries, have a positive relationship between inequality and growth, and vice-versa. The results show that rising income inequality in many Asian countries could be counterproductive for sustaining high growth, and outlines possible policy responses.
format	Working Paper
author	Rahman, Sultan Hafeez Mukhopadhay, Hiranya
author_facet	Rahman, Sultan Hafeez Mukhopadhay, Hiranya
author_sort	Rahman, Sultan Hafeez
title	Economic growth, poverty and inequality revisited
title_short	Economic growth, poverty and inequality revisited
title_full	Economic growth, poverty and inequality revisited
title_fullStr	Economic growth, poverty and inequality revisited
title_full_unstemmed	Economic growth, poverty and inequality revisited
title_sort	economic growth, poverty and inequality revisited
publisher	BRAC Institute of Governance and Development (BIGD)
publishDate	2022
url	http://hdl.handle.net/10361/15917
work_keys_str_mv	AT rahmansultanhafeez economicgrowthpovertyandinequalityrevisited AT mukhopadhayhiranya economicgrowthpovertyandinequalityrevisited
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Economic growth, poverty and inequality revisited

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