Search

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 paper reviews the historical evidence on the relationship between globalisation and economic growth. Divergence in the growth of income and industrialisation in the twentieth century is documented but it is also noted that international income inequality appears to have decreased since about 1870 and that long-run trends in the Human Development Index are much less pessimistic about the experience of developing countries. It is argued that trade liberalisation has been good for growth on average but that successful capital liberalisation requires high institutional quality and that the developmental state may have an important role to play in the early stages of development. The recent claim by Robert Lucas that the 21st century will see a massive reduction in income inequality across countries in a globalised world economy is sceptically discussed in the context of empirical evidence that bad institutions are often persistent and that geography is still a major factor in explaining international income differences. [ABSTRACT FROM AUTHOR]

This paper constructs a dynamic North–South trade model with outsourcing and endogenous innovation. Production of high quality goods is first performed in the North (Northern phase), then split between the North and the South (Outsourcing phase), and finally shifted to the South (Southern phase). This cycle is reignited whenever a Northern firm innovates a higher quality product. We find that an increase in the fraction of outsourced production raises the Northern skill premium unambiguously, while raising the Southern skill premium if and only if the skill intensity of outsourced production is higher than that of local Southern production. [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 study attempts to reassess the relationship between economic growth and inequality using an up to date data set, 2003-2007, for a sample of seventy-four developed and developing countries. Average economic growth during this studied period is regressed against the 2003 values of inequality, growth, education, human development, inflation and governance quality using OLS cross-country models. The findings support a negative impact of inequality on economic growth for the entire sample. In particular, an increase (decrease) in inequality would lead to greater deterioration (expansion) in economic development in low-income countries than in high- and middle-income countries. Furthermore, improvement in governance does not either stimulate or hinder the economic growth. [ABSTRACT FROM AUTHOR]

Worker remittances constitute an increasingly important channel for the transfer of resources to developing countries. Behind foreign direct investment, remittances are the second-largest source of external funding for developing countries. Yet, literature on worker remittances has traditionally focused on the impact of remittances on income distribution within countries, on the determinants of remittances at a micro-level, or on the effects of migration and remittances for specific countries or regions. Macroeconomic determinants and effects of remittances have received more attention only recently. Hence, the focus of this paper is on the macroeconomic determinants of remittances and on differences in these determinants between remittances and other capital flows. We find that remittances respond more to demographic variables while private capital flows respond more to macroeconomic conditions. [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]

A great deal of the current research into nineteenth- and twentieth-century globalisation has been focused through a neoclassical trade theory lens. Applying the Stopler-Samuelson paradigm from Heckscher-Ohlin trade theory, the result is an approach that sees price convergence as pivotal in defining, identifying, and measuring globalisation. This focus, however, obscures the implications of frontier incorporation and other insights achieved by viewing nineteenth-century globalisation as a mechanism whereby peripheral economies were incorporated into the core of organised economic activity. A frontier-centred perspective also reintroduces the role of economic institutions as a crucial element of economic growth and development. [ABSTRACT FROM AUTHOR]

Numerous papers have searched for empirical linkages between long run economic growth and a myriad of economic, socio-political and environmental factors. Most of these studies use ordinary least-squares regression or panel regression analysis on a sample of countries and therefore consider the behaviour of growth around the mean of the conditional distribution. We extend the literature by using quantile regression to analyse long-term growth at a variety of points in the conditional distribution. By using this approach, we identify the determinants of growth for under performing countries relative to those for over achieving countries. [ABSTRACT FROM AUTHOR]

The article compares the demographic effects of income redistribution and accelerated economic growth. It discusses the effects on fertility and mean expectation of life traceable to varying rates of growth in aggregate income and the changes in the income share of the poorer segments of the population. The article shows how he effects vary among less developed countries and with the level of mean income. A brief review of the applicable economic theory is presented.

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]

Despite its rapid economic growth, China remains a developing country facing serious challenges of poverty and inequality. This article examines the development and effectiveness of China's primary anti-poverty family policy, the Minimum Living Standard Assurance ( MLSA, or Dibao). Using rich administrative data and building on the existing literature, this article provides a critical evaluation of MLSA's benefit generosity, coverage, targeting, and anti-poverty effectiveness. To help reinforce MLSA's anti-poverty impacts, local governments in recent years have implemented a series of supplementary policies and programs, including health, education, housing, and work support programs. This article also provides an assessment of these supplementary policies and programs and draws policy implications for the ongoing expansion of the Chinese government's anti-poverty efforts. [ABSTRACT FROM AUTHOR]

The accountability movement in public policy hails a new programme for US foreign assistance - the Millennium Challenge Account established in 2004 with the aim of 'picking winners' for grants among developing countries based on their demonstrated quality of governance. This article uses the MCA's own rating system to dispute its claim to know in advance which countries are best positioned to meet major development goals. High governance scores alone bear little or no relationship to growth in national income or decline in poverty. Attempting to measure public-policy performance limits the range of choice available to policy-makers, and may inadvertently limit true performance. [ABSTRACT FROM AUTHOR]

This article has two goals: (i) to reduce the 7-fold productivity differential required to explain the observed 33-fold income difference between the richest and poorest countries of the world; and (ii) to explain cross-country differences in the capital-output ratio. To achieve the first goal we modify the production function of the standard neoclassical growth model to include public capital whose provision is subject to intermediation costs. For the second goal we distort private investment by introducing credit frictions. The model, quantified using cross-country data, generates an income gap of 33 with productivity differences of only 3 under the measured variations in public and private capital. The required productivity gap declines even further, to 2.1, when we introduce a home-production sector. On the second goal, however, credit frictions do a poor job of explaining cross-country variations in the capital-output ratio. [ABSTRACT FROM AUTHOR]

The relationship between level of economic development and income distribution is analyzed using both a relative measure of income distribution and, for the first time, an absolute measure of income distribution which corrects for purchasing power differences between nations. Cross-sectional regression analysis findings indicate support for non-linear relationships both in the total sample of 68 nations, and also in sub-samples of 54 developing nations and 14 industrial democracies. Our findings suggest that the poorest 40 percent of the population lose income both relatively and absolutely in the early stages of economic development. Thereafter there are gains in income although with diminishing marginal returns at the highest levels of development. [ABSTRACT FROM AUTHOR]

debahr, H ubertus: Die Fluktuation der Arbeitskräfte. A ndic, F uat, A ndic, S uphan, and D osser, D ouglas: A Theory of Economic Integration for Developing Countries. A rrow, K enneth J., and H ahn, F. H.: General Competitive Analysis. B alestra, P ietro: Calcul matriciel pour économistes. B lattner, N iklaus: Die Rolle des Wettbewerbs im Aussenhandel. B ronfenbrenner, M artin: Income Distribution Theory. B runs, W illiam J., Jr.: Introduction to Accounting: Economic Measurement for Decisions. B urkhead, J esse, and M iner, J erry: Public Expenditure. C ulbertson, J ohn M.: Economic Development. C urtis, T homas B., and V astine Jr., J ohn R obert: The Kennedy Round and the Future of American Trade. D alton, G eorge: Economic Anthropology and Development. D avis, L ance E., and N orth, D ouglass C.: Institutional Change and American Economic Growth. D ue, J ohn F.: Indirect Taxation in Developing Countries. G riliches, Z vi, and R ingstad, V idar: Economies of Scale and the Form of the Production Function. Guidelines for Project Evaluation. H aller, H einz, und A lbers, W illi (Hrsg.): Probleme der Staatsver-schuldung. H aveman, R obert H.: The Economic Performance of Public Investments. J ackson, J ohn N.: The Urban Future J änicke, M artin: Totalitäre Herrschaft. J ochimsen, R eimut, und K nobel, H elmut (Hrsg.): Gegenstand und Methoden der Nationalökonomie. J ohnson, H. G., and a Committee of the Money Study Group (Eds.): Readings in British Monetary Economics. K anet, R oger E. (Ed.): The Behavioral Revolution and Communist Studies. K ennedy, K ieran A.: Productivity and Industrial Growth. K iss, T ibor: International Division of Labour in Open Economies. K oblitz, H orst G eorg: Einkommensverteilung und Inflation in kurz-fristiger Analyse. K ornai, J ános: Anti-Equilibrium. R ader, T rout: Theory of Microeconomics. K osta, H. G. J., K ramer, H., und S láma, J.: Der technologische Fort-schritt in Österreich und in der Tschechoslowakei. L ambert, D enis-C lair, et M artin, J ean-M arie: L'Amérique Latine. L amberton, D. M. (Ed.): Economics of Information and Knowledge. M archal, J ean, et L ecaillon, J acques: Analyse Monétaire. O ates, W allace E.: Fiscal Federalism. R urup, B ert: Die Programmfunktion des Bundeshaushaltsplanes. S chäfer, H ans-B ernd: Imperialismusthesen und Handelsgewinne. S cheps, S amuel: The Dethronement of Gold. V ajda, I mre, and S imai, M ihály (Eds.): Foreign Trade in a Planned Economy. V oss, P eter: Zielkonforme Ausgestaltung der Mindestreservenpolitik. W hittington, G eoffrey: The Prediction of Profitability and Other Studies of Company Behaviour. [ABSTRACT FROM AUTHOR]

Questions of choice of techniques and technical change are often discussed as economic problems in the underdeveloped countries, but economists have not systematically taken account of systems of political economy to which their discussions refer. The main argument of this article is that this failure to be systematic about questions of political economy may lead to simplistic recommendations about technology policies, and possibly to some rather ill founded optimism about the efficacy of appropriate technologies as a cure for problems of unemployment and mal distribution of income. It is useful, for illustrative purposes, to start out with a brief discussion of some particular points about A.K. Sen's analysis of choice of techniques. Possibly, the least-noticed assumption is the assumption of a planned economy. All surpluses above the needs of current consumption are directly controlled by the state and are reinvested. Investible resources are scarce and the planners choose techniques of production which maximize their objectives function, subject to the constraints of this scarcity.