Economic Growth, Poverty, and Income Inequality: Implications for Lower- and Middle-Income Countries in the Era of Globalization

2019 ◽  
Vol 23 (1) ◽  
pp. 137-145
Author(s):  
Houda Lechheb ◽  
Hicham Ouakil ◽  
Youness Jouilil
Keyword(s):  
Economic Growth ◽  
Income Inequality ◽  
Middle Income ◽  
Middle Income Countries

scholarly journals Innovations in achieving sustainable economic performance under income inequality

2021 ◽  
Vol 5 (2) ◽  
pp. 146-154
Author(s):  
Inna Cabelkova ◽  
Manuela Tvaronaviciene ◽  
Wadim Strielkowski
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Income Inequality ◽  
Economic Performance ◽  
Financial Services ◽  
Developing Economies ◽  
Well Being ◽  
Middle Income ◽  
Middle Income Countries ◽  
The Impact

The negative effect of income inequality on economic growth represents a topic that constitutes a broad topic of research in the standard economic theory. One of the immediate consequences of income inequality is diminished consumption. Many «poor» customers cannot provide sufficient demand for the producers, causing overproduction that might lead to an economic crisis. It constitutes a problem because sustainable economic performance needs to be achieved under the conditions of income inequality. Reducing social and economic inequality in countries is an essential step towards ensuring that no one is left behind. It is also part of the 10th Sustainable Development Goal aimed to reduce it by 2030. Inequality is based on the income distribution between the top 1% and the bottom 99% of households in any given country. The degree of inequality could play a beneficial role if it is driven by market forces and is associated with incentives to increase growth. In developing and emerging countries, greater equality and improvements in living standards are needed to enable populations to flourish. Inequality reduction is one of the most critical steps a government could take to improve the well-being of its population. The income inequality growth increases human capital in poor countries and reduces it in high and middle-income countries. In poorer countries, it increases them, but in higher – and middle-income countries, it reduces them. Income inequality could be reduced by improving human capital and general skill levels, correcting labor-market policies, and making better use of financial services. In turn, sustainable economic growth could reverse the negative effects of inequality, reducing the need for high-wage and higher-earning households. Thus, it provides higher economic growth. This paper discusses three ways to circumvent the impact of decreasing consumption on economic growth adopted in developing economies over the last fifty years, such as increasing exports, providing loans for consumption, and printing new money. The findings showed that none of these methods seem to be sustainable in the long run. Thus novel and innovative mechanisms that would allow our economy to reduce inequality are necessary and need to be put into place.

scholarly journals What Factors Affect Income Inequality and Economic Growth in Middle-Income Countries?

2019 ◽  
Vol 12 (1) ◽  
pp. 40 ◽  
Author(s):  
Duc Vo ◽  
Thang Nguyen ◽  
Ngoc Tran ◽  
Anh Vo
Keyword(s):  
Economic Growth ◽  
Income Inequality ◽  
Method Of Moments ◽  
Generalized Method Of Moments ◽  
Granger Causality Test ◽  
Causality Test ◽  
Middle Income ◽  
Full Sample ◽  
Middle Income Countries ◽  
Research Period

Income inequality in many middle-income countries has increased at an alarming level. While the time series relationship between income inequality and economic growth has been extensively investigated, the causal and dynamic link between them, particularly for the middle-income countries, has been largely ignored in the current literature. This study was conducted to fill in this gap on two different samples for the period from 1960 to 2014: (i) a full sample of 158 countries; and (ii) a sample of 86 middle-income countries. The Granger causality test and a system generalized method of moments (GMM) are utilized in this study. The findings from this study indicate that causality is found from economic growth to income inequality and vice versa in both samples of countries. In addition, this study also finds that income inequality contributes negatively to the economic growth in the middle-income countries in the research period.

scholarly journals Spatial Externalities of Income Inequality on Security in Latin America

Mathematics ◽  
2021 ◽  
Vol 9 (3) ◽  
pp. 245
Author(s):  
Pablo Ponce ◽  
José Álvarez-García ◽  
Mary Cumbicus ◽  
María de la Cruz del Río-Rama
Keyword(s):  
Income Inequality ◽  
Latin American ◽  
Spatial Dependence ◽  
Generalized Least Squares ◽  
Homicide Rate ◽  
World Health ◽  
Control Variables ◽  
Spatial Error ◽  
Middle Income ◽  
Middle Income Countries

The aim of this research is to analyse the effect of income inequality on the homicide rate. The study is carried out in 18 Latin American countries for the period 2005–2018. The methodology used is the Generalized Least Squares (GLS) model and the data were obtained from World Development Indicators, the World Health Organization and the Inter-American Development Bank. Thus, the dependent variable is the homicide rate and the independent variable is income inequality. In addition, some control variables are included, such as: poverty, urban population rate, unemployment, schooling rate, spending on security and GDP per capita, which improve the consistency of the model. The results obtained through GLS model determine that inequality has a negative and significant effect on the homicide rate for high-income countries (HIC) and lower-middle-income countries (LMIC), whereas it is positive and significant for upper-middle-income countries (UMIC). On the other hand, the control variables show different results by group of countries. In the case of unemployment, it is not significant in any group of countries. Negative spatial dependence was found regarding spatial models such as: the spatial lag (SAR) and spatial error (SEM) method. In the spatial Durbin model (SDM), positive spatial dependence between the variables was corroborated. However, spatial auto-regressive moving average (SARMA) identified no spatial dependence. Under these results it is proposed: to improve productivity, education and improve the efficiency of security-oriented resources.

scholarly journals Foreign aid on economic growth in Africa: A comparison of low and middle-income countries

2015 ◽  
Vol 18 (4) ◽  
pp. 449-462 ◽  
Author(s):  
Aye Mengistu Alemu ◽  
Jin-Sang Lee
Keyword(s):  
Economic Growth ◽  
Foreign Aid ◽  
Low Income ◽  
Empirical Studies ◽  
Critical Role ◽  
Generalized Method Of Moments ◽  
African Countries ◽  
Middle Income ◽  
Middle Income Countries ◽  
Theoretical Hypothesis

Previous empirical studies on the effects of foreign aid on economic growth have generated mixed results that make it difficult to draw policy recommendations. The main reason for such mixed results is the choice of a single aggregate list of countries, regardless of the disparities in levels of development. This study therefore fills the development gap by disaggregating the African data into a panel of 20 middle- income and 19 low- income African countries over a period of 15 years between 1995 and 2010, and employing a dynamic generalized method of moments (GMM) model to address the dynamic nature of economic growth as well as the problems of endogeneity. The results of this study support the theoretical hypothesis that a positive relationship between aid and GDP growth exists, but only for low-income African countries, not middle-income ones. On the other hand, the study reveals that middle- income African countries tend to experience a greater impact on their economic growth from foreign direct investment (FDI) and natural resources revenues, mainly oil exports. This implies that the frequent criticism that foreign aid has not contributed to economic growth is flawed, at least in the case of low-income African countries. In fact, foreign aid has played a critical role in stimulating economic growth in such countries through supplementing domestic sources of finance such as savings, thus increasing the amount of investment and capital stock in them.

scholarly journals Capital account opening and economic growth——an empirical test based on systematic GMM

2021 ◽  
Vol 235 ◽  
pp. 01019
Author(s):  
Siming Jia
Keyword(s):  
Economic Growth ◽  
Empirical Test ◽  
Statistical Significance ◽  
High Income ◽  
Capital Account ◽  
Middle Income ◽  
Middle Income Countries ◽  
National Differences ◽  
The Impact ◽  
Low And Middle Income

This paper collected panel data of 74 countries from 1990 to 2017, and based on the Chinn-It index to depict the degree of capital account opening. Under the framework of the neoclassical economic growth model, the impact of capital account opening on economic growth was empirically tested by systematic GMM. The results show that: first, taking the overall capital account openness as the explanatory variable, the coefficient of the capital account openness of the whole sample is significantly positive. Further, considering the national differences found that high income countries capital account openness coefficient is significantly positive, but in low and middle-income countries capital account openness coefficient on economic and statistical significance were not significant, indicating that high income countries made open dividends, while in low and middle-income countries and earnings in the capital account liberalization. Finally, it proposes to open the capital account sub-projects step by step, strengthen prudent supervision in the process of further opening the capital account, and improve the regulatory legal system.

scholarly journals Immunisation financing and programme performance in the Middle East and North Africa, 2010 to 2017

2019 ◽  
Vol 4 (2) ◽  
pp. e001248
Author(s):  
Helen Saxenian ◽  
Nahad Sadr-Azodi ◽  
Miloud Kaddar ◽  
Kamel Senouci
Keyword(s):  
Economic Growth ◽  
Middle East ◽  
North Africa ◽  
Low Income ◽  
Health Sector ◽  
Cost Effective ◽  
Middle Income ◽  
Middle Income Countries ◽  
Life Saving ◽  
Fiscal Space

Immunisation is a cornerstone to primary health care and is an exceptionally good value. The 14 low-income and middle-income countries in the Middle East and North Africa region make up 88% of the region’s population and 92% of its births. Many of these countries have maintained high immunisation coverage even during periods of low or negative economic growth. However, coverage has sharply deteriorated in countries directly impacted by conflict and political unrest. Approximately 1.3 million children were not completely vaccinated in 2017, as measured by third dose of diphtheria–pertussis–tetanus vaccine. Most of the countries have been slow to adopt the newer, more expensive life-saving vaccines mainly because of financial constraints and the socioeconomic context. Apart from the three countries that have had long-standing assistance from Gavi, the Vaccine Alliance, most countries have not benefited appreciably from donor and partner activities in supporting their health sector and in achieving their national and subnational immunisation targets. Looking forward, development partners will have an important role in helping reconstruct health systems in conflict-affected countries. They can also help with generating evidence and strategic advocacy for high-priority and cost-effective services, including immunisation. Governments and ministries of health would ensure important benefits to their populations by investing further in their immunisation programmes. Where possible, the health system can create and expand fiscal space from efficiency gains in harmonising vaccine procurement mechanisms and service integration; broader revenue generation from economic growth; and reallocation of government budgets to health, and from within health, to immunization.

The dynamic relationships between the female labour force and the economic growth

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Durmuş Çağrı Yıldırım ◽  
Hilal Akinci
Keyword(s):  
Economic Growth ◽  
Labour Force ◽  
Participation Rate ◽  
Labour Force Participation ◽  
Female Labour Force Participation ◽  
Middle Income ◽  
Female Labour ◽  
Content Type ◽  
Middle Income Countries ◽  
Total Labour

PurposeIn this study, the relationship between female labour force participation rate and economic growth is investigated in middle-income countries. The study covers the period of 2001–2016 by employing a dynamic panel approach. Pooled Ordinary Least Square and Fixed Effects model estimations are calculated as a decision criterion to select proper GMM Method. The outcomes indicate that the proper estimation technique, which is a System-GMM model, evidences the U Feminisation Theory for the middle-income countries while controlling all other factors.Design/methodology/approachThe novelty of this study is that the research not only employs both difference and system generalised method of moments (GMM) estimators but also includes main explanatory variables such as education, fertility, and total labour force rate. The study provides an opportunity to review the U-shape nexus between the female labour force and economic growth while controlling education, fertility and total labour participation rate.FindingsThe estimation implies that middle-income countries support a U-shaped relationship. The fertility rate does not impact on the female labour force, and education and total labour force level have a positive influence on women's participation in the labour market.Research limitations/implicationsThis study used data that include the period of 2001–2016 for middle-income countries. So, further studies can use different periods of data or different countries.Practical implicationsThe authors emphasise the importance of economic growth for female labour force for middle-income countries. Thus, a country intending to increase female labour force should also focus on its economic growth. As the study points out, middle-income countries staying under the minimum threshold, $4698.15 (per capita), should priorities their economic improvement policies to reach their female labour force participation goal. Those countries also should be prepared for a female labour force participation declining phase until they reach the turning point income level.Social implicationsFurthermore, education is one of the critical determinants that have an impact on FLFPR. The equal opportunity for both genders to engage in education should be considered as a policy. If females do not have an equal chance to enrolment in education, it may influence the policy of increasing female labour force adversely. Fertility rate appears no more statistically significant in our study. Moreover, today, there are some countries they practise equality between genders by providing equally extended parental leave, which may be a promising policy for gender equality in the labour force and may worth a try.Originality/valueSome previous studies may suffer model mistakes due to lack of consideration the endogeneity problem and bias issue of the results as suggested by Tam (2011). Moreover, previous studies tend to choose either studying U-feminisation as excluding other variables or studying determinants of female labour force participation rate as excluding U-feminisation theory. There is not any panel data study acknowledging both concepts by using recent data to the best knowledge of the authors. Thus, the novelty of this study is that the research not only employs both difference and system generalised method of moments (GMM) estimators but also includes main explanatory variables such as education, fertility, and total labour force rate. The study provides an opportunity to review the U-shape nexus between the female labour force and economic growth while controlling education, fertility and total labour participation rate.

scholarly journals Machine-learned patterns suggest that diversification drives economic development

2020 ◽  
Vol 17 (162) ◽  
pp. 20190283 ◽  
Author(s):  
Charles D. Brummitt ◽  
Andrés Gómez-Liévano ◽  
Ricardo Hausmann ◽  
Matthew H. Bonds
Keyword(s):  
Economic Growth ◽  
Social Systems ◽  
Theoretical Models ◽  
Machine Learning Techniques ◽  
Product Complexity ◽  
Middle Income ◽  
Middle Income Countries ◽  
Learning Techniques ◽  
Extra Weight ◽  
Smooth Dynamics

We combine a sequence of machine-learning techniques, together called Principal Smooth-Dynamics Analysis (PriSDA), to identify patterns in the dynamics of complex systems. Here, we deploy this method on the task of automating the development of new theory of economic growth. Traditionally, economic growth is modelled with a few aggregate quantities derived from simplified theoretical models. PriSDA, by contrast, identifies important quantities. Applied to 55 years of data on countries’ exports, PriSDA finds that what most distinguishes countries’ export baskets is their diversity, with extra weight assigned to more sophisticated products. The weights are consistent with previous measures of product complexity. The second dimension of variation is proficiency in machinery relative to agriculture. PriSDA then infers the dynamics of these two quantities and of per capita income. The inferred model predicts that diversification drives growth in income, that diversified middle-income countries will grow the fastest, and that countries will converge onto intermediate levels of income and specialization. PriSDA is generalizable and may illuminate dynamics of elusive quantities such as diversity and complexity in other natural and social systems.

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