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A strand of the political economy literature emphasizes the effect of income inequality on growth and poverty, which materialises through redistribution. The theoretical expectation postulated by standard economic theory is that high inequality would lead to higher redistribution via the collective action of the median voter. The empirical literature testing the median voter theorem has been conducted in the context of industrialised economies. In this article, we examine the median voter hypothesis with specific reference to SSA, a region characterised by high levels of income inequality and limited redistribution. We adopt an instrumental variable approach to unpack the determinants and plausible mechanisms underpinning this relationship. In the article, we account for the effect of omitted top income earners in income inequality estimates, given their weight in the shape of the income distribution and their influence in redistributive policies. Overall, we find a positive relationship between inequality and redistribution in SSA, especially among middle-income countries. Further examination reveals that the abundance of natural resource rents seems to be the driving force affecting tax policy choices, which in turn exacerbates income inequality and undermines progressive redistribution. Thus, in assessing the relationship between inequality and redistribution, our results do not provide strong evidence to support the propositions of the median voter theorem, but instead, they call for alternative interpretations that seem to align more closely to the existence of multiple steady states. We are grateful to Théophile Azomahou, Gary Fields, Augustin K. Fosu, Njuguna Ndung’u, Yusi Ouyang, Abebe Shimeles, Erik Thorbecke, and seminar participants at the AERC meeting in November 2019 for helpful comments on earlier versions of this article. We are particularly grateful to the African Economic Research Consortium for financial support. Vanesa Jordá acknowledges partial financial support from the Fundación Ramón Areces (CISP20A6658).

We study the impact of a national cash transfer program in Vietnam on labor supply using large household surveys and a regression-discontinuity design based on discontinuity in age eligibility. We do not find evidence of a disincentive effect of the cash transfer on labor supply for adults aged 15-64. More importantly, we find robust evidence that the transfer program causes the adults to move from self-employed non-farm work to wage-paying jobs. A likely mechanism is that the transfer program reduces the labor force participation of older people, and they help housework and childcare for younger adults to have wage-paying jobs.

In this paper we explore the link between commodity dependence and vulnerability topoverty in rural Tanzania with a particular focus on coffee-growing households. Even if thevulnerability rate is quite high in rural Tanzania, our results show, on average, that coffeegrowers have a lower probability of being poor and vulnerable compared to non-growers.However, when coffee growers are disaggregated into small and large, we see that the resultis mainly driven by large coffee growers. For small coffee growers, on the other hand,we do not find evidence to suggest that they are different from non-growers in terms ofboth poverty and vulnerability. When we disaggregate vulnerability into its components,poverty-induced vs risk-induced vulnerability, we find coffee growers to have a relativelyhigher probability of facing risk-induced vulnerability compared to non-growers. Thereare, however, heterogeneities in terms of the size of coffee growers. In particular, relative tonon-growers, small coffee growers have a relatively higher probability of facing risk-inducedvulnerability. On the other hand, conditional on being vulnerable, large coffee growers donot appear to have a statistically significant difference in their probability of facing a risk-induced vulnerability compared to non-coffee growers. These results indicate not only theneed for vulnerability-reducing policies but also the importance of identifying the source ofvulnerability as the choice of the right type of policy intervention depends on understandingthe causes of vulnerability.

Reducing poverty and inequality and promoting inclusive growth are fundamental to achieving the United Nations Sustainable Development Goals. Much has changed in the global economy in recent decades and perspectives on progress made vary widely. This is even more so in light of the ongoing COVID-19 pandemic. However, getting to grips in a meaningful manner with existing trends is critical to evidence-based policy-making. This contribution aims to provide an original review and evaluation of the main stylized facts concerning poverty, inequality, and growth. It will uncover existing trends, put controversies into perspective, and help to provide a platform for informed policy debate.

The theoretical expectation postulated by standard economic theory is that highinequality would lead to higher redistribution via the collective action of the medianvoter. In this paper, we adopt an instrumental variable approach to test the medianvoter hypothesis with specific reference to sub-Saharan Africa (SSA). Overall, we find apositive relationship between inequality and redistribution, especially among middle-income countries, which is driven by the abundance of natural resource rents. Thus,our results do not provide strong evidence to support the median voter theorem, butinstead, call for alternative interpretations, more closely to the existence of multiplesteady states.

In this study, we use a randomized control trial to examine whether asking Vietnamese men to reflect on gender equality can reduce their gender bias. We randomly selected two groups of married men in four rural provinces and asked the first group to make comments on gender-related laws and the second group to write stories about gender equality. We find that commenting on gender-related laws does not reduce men’s bias against women, while writing stories has a strong effect on reducing prejudice against women. Writing stories increases the index of gender attitudes of men in the second group by 0.29 standard deviations. The assignment also has a small effect on their contribution to housework. Changing men’s behaviour in practice requires stronger and more sustained interventions.

In this paper, we empirically examine the potential impact of commodity price fluctuations on the nutritional status of children in the 0–5 age category. This is important as adverse shocks that children experience at the time of birth will have an irreversible long-term impact that can adversely affect subsequent human capital formation. Unlike the bulk of the literature in the area that focuses on the impacts of drought-induced income shocks, we focus on changes in income caused by fluctuations in international coffee prices. We thus aim to estimate the potential impacts of international commodity price fluctuations on the nutritional status of children in commodity-export-dependent developing countries. To this end, we use the three waves of the Tanzanian National Panel Survey (NPS), together with data on international coffee prices. Our results show that an upward coffee price fluctuation is associated with an improvement in childhood nutritional status in rural Tanzania. This result is robust to the inclusion of household (sibling) fixed effects and data choices. The main result of our paper underlines the importance of international commodity price fluctuations for the wellbeing of communities in commodity-export-dependent countries. In the case of Tanzania, for example, the coffee sector creates direct income for about 400,000 smallholder farmers who produce 90 percent of Tanzania’s coffee, which is mainly produced for export. Thus, if not well-managed, international commodity price fluctuations put a strain on the poverty reduction endeavors of developing countries that depend on exports of one or a few non-oil commodities. The results of the paper also have implications for Goal number 2 of the Sustainable Development Goals (SDGs) which aims to end all forms of malnutrition by 2030.

Small and medium enterprises (SMEs) have been at the core of Vietnam’s strategy for inclusive growth and economic transformation. Vietnam has experienced unprecedented growth and poverty reduction, turning the country into a middle-income economy relatively quickly. Most growth came from structural change with labour force movement to the manufacturing sector. This change has largely happened without worrying trends as regards income inequality, especially within urban areas. SMEs have been key for this transition following the Doi Moi reform process. Vietnam adopted a dual-track approach allowing private firms to expand alongside the state sector as long as they fulfilled their quotas at state-given prices. Also important for the development of a thriving SME sector has been reform design and willingness to experiment. These initiatives included state-owned enterprise (SOE) reform, foreign direct investment, industrial zone policies, and business-related administrative initiatives, with significant state influence remaining a core feature of the development strategy.

Structural change has been a significant contributor to Vietnam’s impressive growth experience over the past three decades. Labour has moved rapidly from agriculture into manufacturing, with important improvements in livelihoods as the result. The private sector has played a key role in this success story, and especially small and medium enterprises (SMEs) have shown the necessary dynamism to adapt to an economic policy and institutional reform design, characterized as decentralized experimentalism. This dynamism of private SMEs has played a crucial role for the pace of diffusion of experimental successes—upstream and downstream along the value chain. Whether this success will carry into the future when innovation of new technologies and productivity growth will have to become core drivers of Vietnam’s growth prospects stands out as a major challenge for future success.

For a growing number of African economies the discovery of natural resources is a tremendous opportunity, but one accompanied by considerable risks. Many African countries dependent on oil, gas, and mining have weaker long-run growth, higher rates of poverty and greater income inequality than their less resource-dependent neighbours. One major risk comes from the structure of resource-rich economies themselves. Relative prices make it more difficult to diversify into internationally competitive activities outside the resource sector, thus narrowing the scope for structural change. This chapter focuses on how countries can use natural resources to diversify. Drawing on country-level evidence it explores three key themes: the institutions needed to manage a resource boom, the construction sector, and linking industry to the resource.

This study investigates how manufacturing companies were affected by tropical Cyclone Idai, which struck Central Mozambique in March 2019.The analysis builds upon a representative sample of 464 enterprises located in the cities of Beira and Chimoio which were interviewed 6 and 12 months after the natural disaster. While Beira was largely destroyed in the event, inland Chimoio was only affected to a minor degree, thus constituting our control group.Overall, we find that the cyclone had a large negative effect on income and profits, especially in the month immediately following landfall. Furthermore, the disaster hit some types of manufacturing firms much harder than others. For instance, businesses in the construction industry saw no significant decline in income, whereas micro enterprises, female-owned businesses, and tailors were among the most affected.

Countering recent rises in many countries of inequality in income and wealth is widely recognized as a major development challenge. This is so from an ethical perspective and because greater inequality is perceived to be detrimental to key development aims. Still, an informed debate on the effects of inequality requires clear evidence. This review contributes to the literature by taking stock and providing an overview of current knowledge of the impact of income inequality on three important outcomes: economic growth, health and education as two dimensions of human development, and governance, with a focus on democracy. Drawing on the insights from different disciplines and considering recent work, it reveals that existing evidence provides somewhat mixed results and argues for a need for further in-depth empirical work. It also points to explanations for the lack of consensus embedded in data quality and availability, measurement issues, and the shortcomings of the different methods employed. Finally, we point to promising future research avenues relying on experimental work for micro level analysis, more region- and country-specific studies, and reiterate the need for improvements in the availability and reliability of data.

This study aims to assess the economic costs of COVID-19 and the state of emergency implemented by the Government of Mozambique, relying on a social accounting matrix. It produces numerical results that represent the direct effect on (or 'shocks' to) the economy associated with the pandemic. We distinguish four channels-supply, demand, investment, and export-by which the state of emergency and other efforts influence economic activity. Our simulation suggests that the Mozambican economy lost a total of 3.6 per cent growth in 2020 and that total employment was 1.9 per cent down compared to a scenario without COVID-19. The main part of this loss is foreign-instigated, resulting from a demand reduction for Mozambican products by the rest of the world. The most heavily affected economic sectors are trade and accommodation and mining. Furthermore, our simulation implies that the production factors of capital and urban labour are more affected than rural labour. Moreover, the multisector multiplier analysis brings out the high dependence of Mozambique on a small number of export items (including tourism). Accordingly, Mozambique should promote economic diversification and explore the potential of reducing Mozambique's vulnerability to foreign shocks.