Do Technological Innovation and Financial Development Affect Inequality? Evidence from BRICS Countries

Mduduzi Biyase, Talent Zwane, Precious Mncayi and Mokgadi Maleka
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Talent Zwane: Department of Economics and Econometrics, University of Johannesburg, Johannesburg 2092, South Africa
Precious Mncayi: School of Economic Sciences, North-West University, Vanderbijlpark 1900, South Africa
Mokgadi Maleka: Department of Economics and Econometrics, University of Johannesburg, Johannesburg 2092, South Africa

IJFS, 2023, vol. 11, issue 1, 1-18

Abstract: While technological innovation and financial development are broadly credited as important drivers of economic growth of developed nations, their impact on inequality (especially in emerging economies) remains understudied. Thus, the objective of this study is to investigate the impact of technological innovation and financial development on income inequality in BRICS (Brazil, Russia, India, China and South Africa) countries using panel dynamic ordinary least squares (PDOLS) and panel fully modified ordinary least squares (PFMOLS) with annual data sourced from the Standardized World Income Inequality Database, International Monetary Fund (IMF) and World Bank (1990–2017). The results suggest that technological innovation increases income inequality in the BRICS nations, while financial development has an income reducing effect on inequality. Our results are robust, using alternative estimation with various sub-indicators of financial development (such as financial markets and financial institution), including other measures proxied by access to credit provided by commercial banks. The study’s results have important implications for policy and practice in the BRICS countries. By providing a nuanced understanding of the relationship between technological innovation, financial development and inequality, the study will inform the design and implementation of policies aimed at reducing inequality and promoting inclusive growth in these emerging economies.

Keywords: BRICS; PFMOLS; PDOLS; technological innovation; inequality (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Working Paper: Do technological innovation and financial development affect inequality? Evidence from BRICS countries (2023)
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