Skip to main content
Duke University Libraries
DukeSpace Scholarship by Duke Authors
  • Login
  • Ask
  • Menu
  • Login
  • Ask a Librarian
  • Search & Find
  • Using the Library
  • Research Support
  • Course Support
  • Libraries
  • About
View Item 
  •   DukeSpace
  • Theses and Dissertations
  • Sanford School Master of Public Policy (MPP) Program Master’s Projects
  • View Item
  •   DukeSpace
  • Theses and Dissertations
  • Sanford School Master of Public Policy (MPP) Program Master’s Projects
  • View Item
JavaScript is disabled for your browser. Some features of this site may not work without it.

Does Income Inequality Hamper or Foster Economic Growth in Sub-Saharan Africa?

Thumbnail
View / Download
256.5 Kb
Date
2012-04-20
Author
Lee, KyuSeon
Advisor
Bellemare, Marc
Repository Usage Stats
520
views
1,413
downloads
Abstract
POLICY QUESTION “What is the relationship between inequality and economic growth? Specifically, does income inequality hamper or foster economic growth in developing countries?” BACKGROUND As the global economy experienced rapid economic growth after World War II, an intense debate arose as to whether such growth benefited poor people and reduced income inequality or vice versa. In the 1950s, Kuznets explained that there is a trade-off between income inequality and economic growth. He proposed that income inequality initially rises but then declines as per capita income increases. If this hypothesis is true, the income inequality that developing nations are experiencing is not something that they should be concerned about, as it would eventually decline over the course of their economic growth. Many scholars have attempted to confirm as well as rebut this relationship; however, it remains ambiguous. In contrast, studies of this relationship for sub-Saharan African countries have not been conducted thoroughly. African regions were struggling with extreme poverty and, as a result, dealing with poverty issues was the main concern of the governments and researchers. And sub-Saharan Africa countries had desperate health issues to deal with, such as high HIV prevalence rates. Finally, and most importantly, sufficient data for sub-Saharan African countries were lacking. Recently, academic research on income inequality in sub-Saharan African countries became available as several countries started household surveys, which allowed the collection of more empirical data in this region. The increasing attention of international organizations further accelerated the research. Thus, the purpose of this master’s project is to examine the relationship between income inequality and economic growth in sub-Saharan African countries using these newly-available data. METHODS AND MEASUREMENTS The measure of income inequality used in the current study is the Gini coefficient. The main data source for income inequality is PovcalNet, an online poverty analysis tool provided by World Bank. The constructed data set is an unbalanced panel with data from 40 sub-Saharan African countries from 1980 to 2009. This paper examines the relationship between income inequality and economic growth with country-fixed effects to exclude time-invariant omitted variable bias. RESULTS AND INTERPRETATION This paper finds that income inequality is positively correlated to annual changes in economic growth, controlling for changes in other explanatory variables. As a non-linear relationship was tested, this paper expects that the positive correlation will not continue for long for sub-Saharan African countries and that income inequality will eventually slow and decrease economic growth. This does not support other previous research in which only linear relationships were tested. DISCUSSION AND CONCLUSION The results of this paper cannot guarantee that income inequality will eventually be detrimental to economic growth in the longer term. The measurement error and the possibility of reverse-causality remain as limitations. This paper, however, does address the fact that income equality is related to economic growth, suggesting that policy-makers in both the sub-Saharan African countries and international organizations should be more concerned about income inequality. Finally, this paper suggests that future researches consider the importance of instrumental variables to delineate the causal relationship between income inequality and economic growth.
Type
Master's project
Department
The Sanford School of Public Policy
Subject
income inequality, economic growth, sub-Saharan Africa
Permalink
https://hdl.handle.net/10161/5191
Citation
Lee, KyuSeon (2012). Does Income Inequality Hamper or Foster Economic Growth in Sub-Saharan Africa?. Master's project, Duke University. Retrieved from https://hdl.handle.net/10161/5191.
Collections
  • Sanford School Master of Public Policy (MPP) Program Master’s Projects
More Info
Show full item record
Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.

Rights for Collection: Sanford School Master of Public Policy (MPP) Program Master’s Projects


Works are deposited here by their authors, and represent their research and opinions, not that of Duke University. Some materials and descriptions may include offensive content. More info

Make Your Work Available Here

How to Deposit

Browse

All of DukeSpaceCommunities & CollectionsAuthorsTitlesTypesBy Issue DateDepartmentsAffiliations of Duke Author(s)SubjectsBy Submit DateThis CollectionAuthorsTitlesTypesBy Issue DateDepartmentsAffiliations of Duke Author(s)SubjectsBy Submit Date

My Account

LoginRegister

Statistics

View Usage Statistics
Duke University Libraries

Contact Us

411 Chapel Drive
Durham, NC 27708
(919) 660-5870
Perkins Library Service Desk

Digital Repositories at Duke

  • Report a problem with the repositories
  • About digital repositories at Duke
  • Accessibility Policy
  • Deaccession and DMCA Takedown Policy

TwitterFacebookYouTubeFlickrInstagramBlogs

Sign Up for Our Newsletter
  • Re-use & Attribution / Privacy
  • Harmful Language Statement
  • Support the Libraries
Duke University