Privatization, Governance and Economic Development in Developing Countries

Quantitative Aspects of the Economic Growth of Nations: VIII. Distribution of Income by Size

This study was conducted to examine the role of financial inclusion in economic growth, poverty, and income inequality in developing countries from 2010 to 2020. A panel data consisting of 101 countries for the period 2010 to 2020 was compiled from the World Development Indicators and the Global Financial Inclusion Database (Global Findex Database). The collected data was analyzed using the System Generalized Method of Moments. The study's findings indicate that financial inclusion has a positive impact on improving economic growth and reducing income inequality in developing countries. However, contrary to existing literature, this study found that financial inclusion has a direct relationship with poverty, which can be attributed to the economic peculiarities of developing countries. Therefore, this study concludes that financial inclusion contributes to improved economic growth and reduced income inequality. Although it may not directly alleviate absolute poverty, it helps reduce poverty through the mechanisms of income inequality and economic growth. It is recommended that policymakers and regulators in respective countries focus on expanding the scope of financial inclusion to enhance economic growth and reduce income inequality.

Analysis of Empirical Research on the Factors Influencing the Change of Income Inequality

Objective: to study the impact of the level of broadband Internet access on income inequality in Russian regions.Methods: econometric modeling using the method of analyzing the relationship between inequality and economic growth, developed by Simon Kuznets, for a sample of 82 Russian regions in 2010–2020.Results: the paper examines the theoretical and practical aspects of income inequality of the population. The basis of many scientific studies is the results obtained by S. Kuznets, repeatedly tested in subsequent works. It is determined that under digital economy, inequality in economic development is also manifested in the spread of broadband Internet access. However, previous studies have not answered whether the further spread of the Internet will lead to increased income inequality. The authors of the study put forward and tested the corresponding hypothesis. Based on the analysis results, the authors draw conclusions about the existence of a nonlinear relationship between economic growth and income inequality, as well as the existence of a link between the spread of broadband Internet access and the reduction of income inequality in the Russian regions. At the same time, the results show that the relationship between the development of broadband Internet access and the Gini coefficient has an inverted U-shaped curve. This relationship is a development or analogue of the Kuznets curve, in which the development of digital infrastructure becomes one of the key factors in reducing inequality.Scientific novelty: a method for analyzing the relationship between income inequality and digital development is proposed, which is based on the results of econometric modeling. A model is substantiated and constructed that characterizes the impact of broadband Internet access on income inequality in Russia.Practical significance: the study results substantiate the need to increase the level of broadband Internet connectivity as one of the indicators of reducing income inequality in the Russian regions and, thus, indicate the directions of regional policy in the field of digital infrastructure development.

In 2004 the United Nations University World Institute for Development Economics Research (UNU-WIDER) embarked on a large-scale research project on the ‘Impact of Globalization on the World’s Poor’ co-directed by Machiko Nissanke and Erik Thorbecke. The first conference was essentially conceptual in nature, meant to understand better the various mechanisms and channels through which globalization affects the poor either directly or indirectly. The other three conferences focused on each of the major regions of the developing world: Asia, Africa and Latin America. Theobjectivesofthisintroductionarethreefold:first,toreviewbrieflyhow the forces of globalization influence poverty in general; second, to describe and discuss the main transmission channels and mechanisms; and third to analyze the impact of globalization on Africa and present an overview of the six Africa case studies included in this issue. 1. The Impact of Globalization on the World’s Poor Globalization provides a strong potential for a major reduction in poverty in the developing world because it creates an environment conducive to fastereconomicgrowthandtransmissionofknowledge. 1 However,structural factors and policies within the world economy and national economies have impeded the full transmission of the benefits of the various channels of globalization for poverty reduction. In particular sub-Saharan Africa (SSA) hasbeenrelativelylessaffectedbytheforcesofglobalizationthanotherparts of the world. World income distribution continues to be very unequal and many poor countries particularly in Africa are stagnating. Moreover, there is much empirical evidence that openness contributes to more within-country

This study aims to determine the effect of the Human Development Index, Capital Expenditure, Fiscal Decentralization Against Economic Growth and Income Inequality in East Java in Indonesia. This study applied a quantitative approach using a combination between time series and data between place and space (cross-section), to determine whether there is a relationship between two variables or better direct or indirect influence. The findings indicated that the index of human development (HDI) and capital expenditure have a positive and significant impact on economic growth. The higher Human Development Index and capital expenditure affect the greater economic growth rate. However, the degree of fiscal decentralization does not influence economic growth, while economic growth has a positive effect and significant effect on income inequality. Inter-regional economic growth showed varies, in increasing per capita income in some areas of high economic growth, while some other regions have low economic growth, resulting in increased income inequality. Keywords: Human Development Index, Capital Expenditure, Fiscal Decentralization, Economic Growth JEL Codes: E62; O15; R11

In the past years, Ghana has witnessed a significant increase in Foreign Direct Investment which is expected to translate into transformative growth that reduces poverty and inequality; however, the country’s poverty and income inequality profile remain high. Foreign direct investment (FDI) and poverty research are important because FDI can have both positive and negative effects on poverty levels in host countries [1]. The positives imply that FDI can bring in capital, technology, and job opportunities, which can help reduce poverty by boosting economic growth and raising people's living standards. On the other hand, FDI can displace local businesses, exacerbate income inequality, and have environmental consequences that harm the poorest members of society. Understanding the relationship between FDI and poverty can assist policymakers and businesses in making informed decisions that promote inclusive and sustainable economic growth and reduce poverty. This study investigates the impact of FDI on poverty in Ghana using a 29-year data set from (1990 to 2018). Analysis was done using the Johansen Cointegration technique. The literature informed the variables used for this study. The Gini coefficient (which serves as a proxy for poverty and its parts of the FGT poverty indices family), foreign direct investment (FDI), GDP per Capita, exchange rate, trade openness, and inflation rate were all cointegrated. The results of the study showed that FDI, GDP per capita, inflation rate, and exchange rate widen the income inequality gap, hence, increasing the poverty incidence. In contrast, an increase in trade openness reduces the Gini coefficient implying a reduction in income inequality and poverty.

It has been observed that income inequality is an economic element that may impede a nation's economic development. In general, Indonesia's Gini ratio has remained low for nearly a decade, although one region, Yogyakarta Province, unexpectedly exceeds the national average. The provincial government of Yogyakarta must focus more on reducing income inequality. Therefore, this study employs the Poverty-Growth-Inequality Triangle model approach to investigate the complexity of income inequality in Yogyakarta Province. The data is collected from five cities in Yogyakarta Province from 2010 to 2021. For the quantitative study, a Simultaneous Equation Model analysis with three iterations of least squares is performed. The results indicate that there is no causal relationship between income inequality and economic growth or poverty. According to the model of income inequality, education and the district minimum wage have a significant impact on income inequality. Therefore, local governments are advocated to evaluate policies aimed at reducing income inequality through education system reform, equity in district minimum wage and economic growth, and efficiency in the utilization of income inequality-related funds.

The main objective of the study is to investigate the relationship between economic growth and income inequality in Ethiopia during the period 1980-2014. The linear regression model is applied in order to investigate the long-run and short run relationship between the dependent variable (real GDP) and included explanatory variable. The finding shows that there is a stable long run relationship between real GDP and included variables. And the empirical results reveal that income inequality measured by gini coefficient is found to have negative impact on economic growth. The study has also an important policy implication which implies that economic growth can be improved significantly when the income inequality among people reduced through different redistributive mechanisms. Keywords: - Economic growth, Income Inequality, Gini coefficient, Ethiopia DOI: 10.7176/JESD/13-11-04 Publication date: June 30 th 2022

This study examines the short- and long-run impacts of economic growth and unemployment (SDG 8), energy consumption (SDG 7) and income inequality (SDG 10) on CO2 emissions in South Africa over the period 1980-2012 to establish potential synergy/trade-off to achieve these goals. We use the autoregressive distributed lag (ARDL) approach to cointegration technique. Our results show that the promotion of economic growth (SDG 8) as well as the reduction in energy consumption/increase in energy efficiency (SDG 7) can be achieved in synergy with the reduction of CO2 emissions (SDG 13). On the other hand, our results suggest a trade-off between reducing unemployment rate or achieving productive employment and decent work (SGD 8) and mitigating CO2 emissions (SDG 13). Neither a synergy nor trade-off (neutral relationship) is found between the reduction of income inequality (SDG 10) and the reduction of CO2 emissions (SDG 13). Our findings highlight the importance of mainstreaming SDG’s policy interactions to achieve sustainable development goals, while also stressing the potential for South Africa to achieve low-carbon development should economic growth be decoupled from carbon-intensive energy use through policies that promote access and effective use of clean energy. The transition to clean energy is therefore emphasized and relevant factors underpinning such as transition should be explored further. Highlights This study examines the short- and long-run impacts of economic growth and unemployment (SDG 8), energy consumption (SDG 7) and income inequality (SDG 10) on CO2 emissions in South Africa The autoregressive distributed lag approach to cointegration is employed A synergy is established between the promotion of economic growth (SDG 8) and the reduction of CO2 emissions (SDG 13), and between the reduction in energy consumption/increase in energy efficiency (SDG 7) and the reduction of CO2 emissions (SDG 13) A trade-off is confirmed between reducing unemployment rate or achieving productive employment and decent work (SDG 8) and mitigating CO2 emissions (SDG 13) A neutral relationship is found between the reduction of income inequality (SDG 10) and the reduction of CO2 emissions (SDG 13) Policymakers need to mainstream SDG’s policy interactions to achieve sustainable development goals South Africa can achieve low-carbon development should economic growth be decoupled from carbon-intensive energy use through policies that promote access and effective use of clean energy

Uplifting economic growth is crucial for the sustained development and prosperity of an economy. The main objective of this study is to investigate the impact of institutional quality, foreign direct investment (FDI), inflation, and domestic investment on the economic growth of Latin America from 1996 to 2021. The study utilizes a combination of panel unit root testing, cross-sectional dependency testing, panel cointegration testing, and the Panel Autoregressive Distributive Lag (PARDL) technique to shed light on the dynamics of the region's economic development. The panel cointegration techniques confirm the existence of a long-run relationship among the selected variables over the chosen time frame. The PARDL technique is employed to determine the short- and long-run impact of institutional quality, FDI, inflation, and local investment on the economic growth of Latin America. The results show that institutional quality, FDI, and local investment have a significant positive impact on the economic growth of Latin America, while inflation has a negative impact. These findings suggest that policymakers in Latin America should prioritize improving institutional quality, encouraging FDI, and promoting local investment while controlling inflation. A comprehensive economic strategy that considers both short- and long-term dynamics is necessary, highlighting the importance of an integrated approach that recognizes their interaction. The study recommends improving the quality of institutions, especially political stability, to attract FDI and encourage domestic investment by promoting a business-friendly environment, guaranteeing financial accessibility, encouraging innovations, promoting regional and global integration, controlling inflation, reducing income inequality, and raising the standard of living.

Income inequality has long been a frustrating feature of Malaysian economic development. The country income inequality, represented by the Gini Coefficient has decreased only slightly to 0.41 in 2014 from 0.51 in 1970. This income inequality, however, was accompanied by rapid economic growth. Gross Domestic Product (GDP) has grown by an average of more than 7 percent per year for 25 years or more. The expectations that the high economic growth would accompany low income inequality as hypothesized by the inverted ‘U-shaped’ Kuznets curve have not come true for Malaysia. Why did it occur? Unlike many other conventional studies which look at the relationship between growth and income inequality to explain this phenomenon; this study intent to looks at the foreign direct investment (FDI) relationship with income inequality. Since 1990s, FDI has been an important source of economic growth for Malaysia, bringing in capital investment, technology and management knowledge needed for economic growth. FDI had increased almost thirty-fold during 1970s to 2000s. There is a heated debate on the effects of FDI on income distribution. While FDI may have been good for development this masks the facts that not all types of workers necessarily gain from FDI to some extent. FDI induced skill specific technological change where it can be associated with skill-specific wage bargaining or skill-intensive sectors. This study presents an attempt to evaluate the impact of foreign direct investment (FDI) on income distribution among labors. The Malaysia’s Social Accounting Matrix (SAM) is constructed as a framework for the analysis. In this SAM the detail framework of the component of FDI in various sectors, production sectors and labor groups are essential to analyse different effects from different component of FDI on the labor’s income distribution among different labor group. This structure of SAM would answer the question of either and which component of FDI will benefit the most to the low income. The study finds that the FDI expansion has impacted negatively on the distribution of income across different labor groups, where it has increased the high-low or skilled-unskilled income inequality. It also indicates that there are differences in the composition of the FDI that impacts income distribution among labor. The apparent differences in the magnitude of the effects of the different FDI components suggests that variations in the FDI allocations among sectors should be considered as a possible policy variable to achieve income equality goals.

Kuznets (1955) stated that in the early stages of a society's economic development, income inequality would increase with economic growth, and in the later stages of economic growth, income inequality would decrease. The aim of this study is to analyze whether Kuznets (1955) hypothesis was valid for the Turkish economy with the help of ARDL boundary test approach using data from 1987-2019 period. As a result of the analysis, it was found that there is a negative relationship between economic growth and income inequality. These results indicate that Kuznets' inverted-U hypothesis is not valid in Turkey, but rather that the relationship between economic growth and income inequality is similar to the U-shape.

The law on the tax system is of great interest when we discuss income inequality and economic growth. The understanding and interpretation of the purpose of taxes are closely related to the rule of the role of the state as the expansion of the role of the state increases the need for monetary means by which the state meets public needs and which in itself constitute public revenues (Bardho, 2022). This study aims to highlight the impact of income inequality and economic growth in the case of North Macedonia. The distribution of income and the average level of income in a developing country is the key factor for social wellbeing. Countries, where income inequality is decreasing, grow faster than those with rising inequality (OECD, 2014). The data used are time series data and cover the period 1997–2019. This study uses data from World Development Indicators (WDI) and sheds light on the factors, which impact income inequality using multiple regression analyses. This study employs the OLS regression analysis in order to estimate the variables that affect income inequality and economic growth. It is concluded that the positive Gini coefficient approves the Kuznets hypothesis and the pro-inequality theory which means that in the first phase of countries’ development, income inequality is expected to be positively linked to economic growth. The study suggests that economic growth, if the benefits of growth are evenly distributed, has a positive effect on reducing income inequality

Employing a two-stage least-squares multiple regression technique using cross-sectional data from metropolitan statistical areas (MSAs) as the unit of analysis, this study is designed to detect the indirect effect of skill-biased technological change (SBTC) on household income inequality through changes in the rate of per capita economic growth over the decade of the 1990s. If recent technological changes are skill-biased and tend to raise inequality, as much previous research has suggested, and if such technological changes are a relatively large determinant of economic growth, then we should be able to observe a positive association between technology-driven economic growth and income inequality, all else constant. However, the data and method employed here could not establish support for this hypothesis. Instead, the measures of technological change employed in this study are found to raise per capita economic growth, but economic growth is found to decrease, not increase, household income inequality. In a related vein, this research study seeks to test the theory of an extended or reformulated Kuznets Curve Hypothesis in which economic growth and income inequality might be positively correlated due to structural changes in advanced post-industrial economies. This reformulated Kuznets Curve Hypothesis is linked to the theory that growth and inequality might both be related to SBTC resulting from structural shifts away from a mature industrial economy and toward the emerging information and knowledge economy of the 1990s and beyond. This theory, too, must be rejected based upon the findings presented here. Instead, economic growth is found to be negatively correlated with changes in household income inequality in metropolitan areas over the 1990s, confirming the original Kuznets Hypothesis that rising economic growth compresses the income distribution. Other variables are also found to explain variations in household income inequality in metropolitan areas over the decade, including changes in educational inequality, population growth rates, and changes in black-nonblack housing segregation. Overall, the findings presented here suggest that (1)further work must be done to substantiate the SBTC explanation for rising income inequality, (2)the effects of technological change may have little or no impact on inequality through economic growth, (3)the original Kuznets Curve Hypothesis appears to hold true even during periods of apparent structural change in an advanced post-industrial economy, and (4)numerous additional factors not identified by this study must be responsible for the variations in metropolitan household income inequality over the decade in question.