Kappel, V (2009) explored the impact of financial liberalization on poverty and income inequality by using panel and cross country data of developed and developing countries. By applying OLS and 2SLS significant negative relationship is found between financial development and income inequality. In developed countries weak evidence was found for financial development to decrease income inequality whereas in developing countries financial liberalization was found to increase income inequality. Pradhan (2010) examines the causal relationship among economic growth, financial development and poverty reduction in India during the period of 1951 to 2008. The empirical analysis deploys cointegration and dynamic Granger’s causality. Long run equilibrium relationship is found to be present among financial development, economic growth and poverty reduction .The Granger’s causality test shows that there is unidirectional causality from poverty reduction to economic growth, economic growth to financial development, and financial development to poverty reduction and economic growth to poverty reduction. It also shows the presence of no causality between financial development and economic growth, and poverty reduction and financial development. The research study recommends that economic growth is of prime importance to stimulate financial development and both could play a pivotal role in reducing poverty. Jeanneney and Kpodar (2006) examine how financial development is useful in reducing by poverty on one hand by McKinnon conduit effect and on the other by promoting economic growth. The study is conducted on a panel of developing countries during the period of 1966 to 2000 first by employing OLS and then by Dynamic panel Generalized Met... ... middle of paper ... .... The bank of Albania (2009) inspects the causative association between financial development and economic growth for the Albanian economy using the Granger causality test for five different proxies for financial development. For the non-stationary and non-cointegrated series, the VAR model has been constructed and later, the above test has been applied. For non-stationary series but with a cointegrating relationship, the Granger-causality test has been applied after the construction of the vector error correction model (VECM). The empirical findings of the study show that there is a positive relation between all indicators measuring the financial development and economic growth in the long term. While in the short term, this relation is quite vague since different indicators provide different results. The data used in this paper belong to the period 1996-2007.
"Economic Development. (From the Library)." Government Finance Review 17.6 (Dec 2001): 58(1). General OneFile. Gale. Apollo Library. 19 May 2008 ..
Houa, Han, and Su-Yin Cheng. "The roles of stock market in the finance-growth nexus: time series cointegration and causality evidence from Taiwan." Applied Financial Economics, 2010: 975–981.
What can two dollars buy you? A small coffee at Starbucks, a candy bar, bag of chips, and a soda, a slice of pizza. For nearly three billion people, approximately half of the world’s population, two dollars a day is all the money that the person has to live on. Moreover, of the 2.8 billion children in the world, 1 billion grow up in poverty; 640 million without adequate shelter, 400 millions with no access to safe water, and 270 million with no access to health services (UNICEF 2014). One proposed reason for this harsh reality of high poverty rates is globalization - the growing integration of economies and societies around the world. The claim that globalization generates poverty has been the focus of many debates for the last twenty years, including the debate between Carlos Caretto, Gillian Crowl, Steve Grossman, and Annie Wong on February 21, 2014. Caretto and Crowl argued that poverty is an indirect result of globalization as is evident by high unemployment rates, wage inequality, and diminishing health and educational programs. Grossman and Wong contended that globalization does not generate poverty, but it in fact helps the world by promoting education, decreasing and shortening the length of wars, and increasing new resources. Close examination of the facts presented in lectures, readings, and the debates shows that each side presents logical evidence, but the facts confirm that globalization does in fact generate poverty.
Professor Raghuram G. Rajan of the Booth School of Business of the University of Chicago is one of the renowned economic analysts who believe that the levels of inequality had everything to do with both the financial crises of 1920 and 2008. According to him the rising levels of inequality in the past three decades led to rise in political pressure for redistribution that eventually came in th...
Multiple theories have been developed to observe the correlation between income inequality and economic growth. This paper aims to grow off of theories developed in Galor and Zeira (1993) , Barro(2000) , MacDonald and Majeed(2010) . In some countries wealth distribution is fairly even and in other countries the distribution of wealth is extremely disproportional. Which is better off, an economy with low-income inequality or high-income inequality or does wealth distribution not affect the overall economy. In this dissertation I will analyze the effects of income inequality on a country’s economic growth, arguing that the bases of correlation between income inequality and economic growth is dependent on a country’s initial state of economic standing. This thesis will argue that countries with an initial state of developed see a positive correlation between income inequality and economic growth, whereas countries with an initial state of developing see a negative correlation between income inequality and economic growth.
The first is the rate of economic growth itself. The second factor is the extent of inequality. Inequality is not a final outcome of growth but plays a central role in determining the rate and pattern of growth. As well, growth may be associated with rising inequality, where inequality raises poverty. In the literature, several studies emphasize the importance of inequality in explaining how income growth may contribute to poverty reduction (Alesina and Rodrik, 1994; Bourguignon, 2003 ; Easterly, 2007 ; Ravallion, 1997). These studies clearly demonstrate that higher income inequality reduces the poverty impact of growth regardless of the poverty measures chosen. Conversely, lower initial income or asset inequality is empirically associated with higher economic growth coupled with higher poverty-reducing effects of such growth. Easterly (2007), testing the inequality hypothesis for institutional quality, openness, schooling, and other fundamental determinants of development, confirms these conclusions. He found high inequality to be a large and statistically significant hindrance to developing the mechanisms by which economic development is
Economic growth in developing countries is impeded by frequent inefficiencies arising from poor infrastructure, inadequate institutional structures e.t.c. because endogenous theory overlooks these influential factors, its applicability for the study of economic development is
... (Ravallion, Pro-Poor Growth: A Primer, 2004). This highlights that purely market economic growth may not necessarily benefit the whole population of the nation. Supporting this argument Giffins (1977) found that even if growth did benefit poor and poverty was reduced, not everyone in the poor sector reaped the gains (Fields, 1989). These arguments that growth did not necessarily lead to the alleviation of poverty were presumably based on the Kuznet Curve hypothesis. In short, the distribution of income gets worse and will not improve until a moderate level of income is reach. Subsequently, this could lead to years before poverty is reduced. However, some studies have found there to be no linear relationship between income inequality and economic growth (H & JR, 2004). Nevertheless, these points highlight the arguments in favour of devising development policies.
There is widespread poverty in Pakistan and the two main reasons are poor governance and income inequality. Few studies have focused on the theoretical substantiation of impact of bad governance and income inequality on poverty, but we do not find any study carrying empirical work on the impact of bad governance on poverty in Pakistan. This study is an empirical research that attempts to find out the long run and short run impact of poor governance and inequality in wealth and income distribution on poverty in Pakistan through time series analysis from the year 1984 to 2008. Autoregressive Distributive Lag (ARDL) Approach to Co integration is applied in order to find out the short run and long run relationship between the variables. Co integration between poverty, poor governance and income inequality is found in the present study. The results of this study also confirm the positive relationship between poverty and income inequality both in short and long run. Poor governance is found to positively affect poverty in the long run, but in the short run it does not have significant impact on poverty in Pakistan. CUSUM and CUSUMQ stability tests are employed on the model and the results show there is a stable relationship between the variables indicating stability of the estimated model.
Raveesh (2011) has attempted to analyze the relationship between bank credit and economic growth in North-East region consisting of seven states and observed that banks has provided significant amount of money but there has not much impact on the economic growth causing the region towards further backwardness.
Prasad, Eswar S., et al. “Effects of Financial Globalization on Developing Countries: Some Empirical Evidence.” The National Bureau of Economic Research. National Bureau of Economic Research, 2003. Web. 10 Dec. 2013. .
In recent years, one of the major concerns of economic development is the study of poverty, the income distribution and growth in the less developed countries (LDC’s) or Third World countries. Economists from all over the world have been doing researches and studies on how to induce a growth in those underdeveloped countries. However, countries differentiate in historical backgrounds, cultural believes and natural resources. As a result, the government would implement different strategies to attain a much fairer distribution of income among the society. The relationship between the income distribution and growth in the LDC’s is a significant factor that would affect government policies. Also, the study of the strategies, promoted from the government, would show us how the government can enable economic growth with a more equal income distribution.
There are at least four different research perspectives about the relationship between development and economic growth. Firstly, economic growth is the basis for social development. Secondly, economic growth and social development are not necessarily linked. Thirdly, both economic growth and social development are not basic causes by each other, but they depend on interaction. Fourthly, social development is the prerequisite for economic growth (Mazumdar. 1...
In order for any country to survive in comparison to another developed country they must be able to grow and sustain a healthy and flourishing economy. This paper is designed to give a detailed insight of economic growth and the sectors that influence economic growth. Economic growth in a country is essential to the reduction of poverty, without such reduction; poverty would continue to increase therefore economic growth is inevitable. Through economic growth, it is also an aid in the reduction of the unemployment rate and it also helps to reduce the budget deficit of the government. Economic growth can also encourage better living standards for all it is citizens because with economic growth there are improvements in the public sectors, educational and healthcare facilities. Through economic growth social spending can also be increased without an increase of taxes.
The objective of this paper is to make an economic development and economic growth comparison of these four countries. The comparison will be multi-faceted. It will compare monetary perform...