Investigating the interlinkages between infrastructure development, poverty and rural–urban income inequality

Varun Chotia and N.V.M. Rao

Studies in Economics and Finance, 2017, vol. 34, issue 4, 466-484

Abstract: Purpose - The purpose of this paper is to investigate the relationship between infrastructure development, rural–urban income inequality and poverty for BRICS economies. Design/methodology/approach - Pedroni’s panel co-integration test and panel dynamic ordinary least squares (PDOLS) have been used to carry out the analysis. Findings - The empirical findings confirm a long-run relationship among infrastructure development, poverty and rural–urban inequality. The PDOLS results suggest that both infrastructure development and economic growth lead to poverty reduction in BRICS. However, rural–urban income inequality aggravates poverty in these nations. The paper advocates for adopting policies aimed at strengthening infrastructure and achieving economic growth to reduce the current levels of poverty prevailing in the BRICS nations. Originality/value - Significant limitations exist in the literature in terms of not clearly defining the nature of relationship and interlinkages between infrastructure development, poverty and inequality, with regard to the BRICS nations. The available studies mainly focus on the relationship between infrastructure and growth, with the universal agreement being that these two are positively related. However, it is still not right to assume that economic growth attributable to infrastructure development will, therefore, subsequently lead to a reduction in inequality. This forms the basis for this study, that is, to critically examine the relationship between infrastructure development, inequality and poverty for BRICS nations.

Keywords: Infrastructure development; Poverty reduction; Rural–urban income inequality; Panel co-integration; Panel dynamic OLS (PDOLS); Panel granger causality; C22; H54; I32; O11 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:sefpps:sef-07-2016-0159

DOI: 10.1108/SEF-07-2016-0159

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