Economic Growth and Income Inequality Relationship: Role of Credit Market Imperfection

Amina Tabassum and Muhammad Majeed

The Pakistan Development Review, 2008, vol. 47, issue 4, 727-743

Abstract: This paper examines the empirical relationship between economic growth and income inequality both at aggregate and regional level using more comparable data set for 69 developing countries over the period 1965-2003. The study identifies credit market imperfection in low-income developing countries as the likely reason for a strong negative relationship between income inequality and economic growth. While in short run the relationship between growth and income inequality might be positive but over time more income inequalities reduces economic growth. Moreover, this paper finds evidence that more physical and human capital investment, openness to trade and higher government spending have statistically significant impact on enhancing economic growth and reducing inequality.

Keywords: Economic Growth; Income Inequality; Poverty; Credit Market Imperfection; Trade Openness (search for similar items in EconPapers)
Date: 2008
References: Add references at CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.pide.org.pk/pdf/PDR/2008/Volume4/727-743.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pid:journl:v:47:y:2008:i:4:p:727-743

Access Statistics for this article

More articles in The Pakistan Development Review from Pakistan Institute of Development Economics Contact information at EDIRC.
Bibliographic data for series maintained by Khurram Iqbal ().