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Growth and Inequality in Africa: Reconsideration

Seyi Akadiri () and Ada Chigozie Akadiri

Academic Journal of Economic Studies, 2018, vol. 4, issue 3, 76-86

Abstract: Considering the recent interest in the need to curb inequality and enhance economic growth as a tool for fighting poverty in Africa, we employ a panel of 20 African countries. The paper empirically examines the determinants of growth and income inequality and the channel through which growth determinants influences income inequality. The study is restricted to the period 1991 to 2015 based on data availability. We employ Panel Fixed Effect (PFE) models to investigate growth-inequality relationships and find that, there exists a positive long-run relationship between growth and inequality in the selected African countries. For causality analysis, we employ Dumitrescu and Hurlin (2012) Granger causality for heterogeneous non-causality test approach, where we found neutrality hypothesis between growth and income inequality, and between foreign direct investment and inequality, while between other regressors all with a feedback. The results suggest that population growth; mortality rate, government consumption expenditure and foreign direct investment are principal determinants of the long-run growth and income inequality within the selected African countries.

Keywords: Economic growth; income inequality; panel data; Africa (search for similar items in EconPapers)
JEL-codes: C33 N17 O55 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:khe:scajes:v:4:y:2018:i:3:p:76-86