Undergraduate Economic Review
Abstract
The paper deals with the consequences of an unequal wealth distribution on economic growth in developing countries. Understanding whether or not there is a trade-off between inequality and growth is fundamental in order to give the adequate attention to those policies that avoid increases in inequality, which may hurt overall growth. With the use of crosscountry regressions in the context of modern growth theory and its idea of conditional convergence, the paper shows that higher initial income and land inequalities have a growth-reducing impact in the long run. A more in-depth analysis is necessary to establish the channels through which inequality affects growth. Nevertheless, the study highlights factors, such as land reform and access of the poor to legal and credit systems, as fundamental to open up opportunities in unequal societies and to eliminate privileges held only by the rich.
Recommended Citation
Caselli, Mauro
(2006)
"Does High Inequality in Developing Countries Lead to Slow Economic Growth?,"
Undergraduate Economic Review: Vol. 2:
Iss.
1, Article 2.
Available at:
https://digitalcommons.iwu.edu/uer/vol2/iss1/2