Growth, Inequality and Poverty: Some Empirical Evidence from Minas Gerais State, Brazil

Rosa Fontes, Elydia Silva, Luis F. Alves and Geraldo E.S. Júnior
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Rosa Fontes: Universidade Federal de Vicosa-Minas Gerais / Brazil
Elydia Silva: Universidade Federal de Vicosa-Minas Gerais / Brazil
Luis F. Alves: National Treasure / Brazil
Geraldo E.S. Júnior: Universidade Federal de Vicosa-Minas Gerais / Brazil

No 128, Ibero America Institute for Econ. Research (IAI) Discussion Papers from Ibero-America Institute for Economic Research

Abstract: This chapter is motivated by the fact that the Brazilian economy has one of the highest income inequality index in the world. According to Paes de Barros et al(2000), average income of the 10% richest people in Brazil is 28 times higher than the average income of the 40% poorest people. In Argentina, it is 10 times, 13 times in Costa Rica and 5 times in France. Brazilian growth did not benefit all classes and inequality is increasing since the 60´s. While the 10% richest people get 48% of total income, the 10% poorest people get 0,8% of total income. The inequality problem also arises in the Brazilian regional income analysis. Minas Gerais is a rich and dynamic state with 300.000 km2 divided into 10 different regions, 66 microregions and 853 towns. It is located in the Southeast developed part of the country and is responsible for 10% of Brazilian GDP. As the rest of Brazil, it has a dual economy with prosperity and poverty and social and economic heterogeneity. This chapter empirically analyses the economic growth and income inequality behavior in Minas Gerais towns and microregions from 1970 to 2000, using the income convergence hypothesis. Convergence tests such as Barro and Sala-i-Martin(1992), σ- convergence, Drennan & Lobo(1999) and Quah(1993) are performed. The role of human capital in growth is analysed for Minas Gerais 66 microregions. A comparison is also made between very rich regions and very poor regions of this state to see the relationship between regional inequality and poverty.

Pages: 30 pages
Date: 2005-11-16
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Citations: View citations in EconPapers (1)

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