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The main aim of this paper is to examine the threshold impact of financial development and trade liberalization on income inequality as a measure of sustainable development in a sample of developed and developing countries using panel threshold analysis. Two major dimensions of financial development are considered: liquid liabilities and stock market capitalization. The empirical results revealed that financial development reduces income inequality only in countries where their GDP per capita is above ~US$11,000. It has no significant impact in reducing inequality in developing countries. This implies that institutional reforms in less developed and developing countries are necessary in order to reap the gains from financial development. Trade liberalization is found to have a positive impact on income inequality for both country groups—that is, trade benefits have worsened the income distribution. [ABSTRACT FROM AUTHOR]

This article examines the developer's dilemma—a seeming quandary emerging from the fact that developing countries simultaneously pursue two different developmental goals: (a) seeking economic development through structural transformation and (b) reducing income inequality. However, the proclivity of increasing income inequality while pursuing structural transformation is often referred to as the developer's dilemma. This study investigates for the presence of this dilemma in Africa using sample splitting and threshold estimation technique. While we find support for the existence of a developer's dilemma, suggesting that structural transformation induces income inequality, the income inequality‐widening effect is disproportionate. [ABSTRACT FROM AUTHOR]

This article studies the relationship between economic growth and income inequality using panel data for a sample of Latin American countries in the period 1960-2000. Different estimation techniques and specifications are tested. Results indicate that the level of inequality has had a different effect on growth in the region, depending on the level of gross domestic product per capita. Even within a sample of developing countries, the effect of inequality on growth is negative for poorer countries, whereas for richer ones higher inequality may favour economic growth. Overall, our results are not robust to different specification techniques, and coefficients are in some cases only weakly significant, underlying the difficulties in finding a strong and robust relationship between income inequality and economic growth. [ABSTRACT FROM AUTHOR]

The development process and the demographic changes that are a central element of it explain both the nearly two centuries of increasing income inequality prior to 2000 and the reversal of this trend that followed. There are at least four phases of the development process: (1) Malthusian pre‐development, (2) initial growth, (3) improved productivity, and (4) receding growth. Prior to the industrial revolution, the entire world was in the Malthusian Phase 1. During 1820–1950, about 20 countries, mostly in Western Europe, North America, and Oceania, moved out of Phase 1 and began to grow more rapidly. But, per capita income levels in the rest of the world continued to stagnate and worldwide income inequality widened continuously for at least 150 years following the Industrial Revolution. Around 1960, developing countries began to escape the Malthusian trap and move into Phase 2 of development. By the latter part of the 20th century, many developing countries were achieving growth rates equal to or greater than the high‐income countries, slowing the rise in inequality. By 2000–2015 most developing countries were in either Phases 2 or 3 of development, while most of the high‐income countries were moving into Phase 4, leading to a sharp reduction in worldwide income inequality. The recent reductions in worldwide income inequality are likely to continue in the near term because of the continuation of the more favorable demographic changes in developing compared to high‐income countries. [ABSTRACT FROM AUTHOR]

Africa has the largest number and proportion of fragile states in the world. Fragile states are characterized by slower economic growth, higher incidences of poverty, and persistent inequality. Thus, there is a circular relationship between fragility, inequality, and slow economic growth. This study examines the relationship between fragility, financial inequalities, and inclusive growth in African countries. We introduce a novel way of examining inclusive growth in African countries by developing a unified measure of inclusive growth that captures the two dimensions of inclusive growth: income growth and income distribution. This enables us to adequately assess not just increased opportunities arising from economic growth, but also see how those new opportunities are distributed across all segments of the population. We captured the fragile status of African countries by using an index of fragility. We measured financial inequalities using new data on financial inclusion. The data analysis suggested negative relationships between fragility and inclusive growth in African countries. In addition, the results suggest positive relationships between financial inclusion and inclusive growth. Thus, inclusive growth can be fostered through policies that reduce financial inequalities. Therefore, a less fragile environment is conducive to inclusive growth both directly and indirectly through financial inclusion. [ABSTRACT FROM AUTHOR]