Economic inequality and economic development...

Go hand in hand.
26% (9 votes)
Go in opposite directions.
74% (26 votes)
Total votes: 35

Comments

I think it goes in opposite directions and we have an empiric evidence in USA, the most development country and the strongest medial class in the world.

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Economic growth affects the allocation of resources. It affects the distribution of income.If a country grows its citizens have more money and reduces inequality.

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One of the most operational and accepted in these times of economic theories is
which is characterized as the "trickle down" (by filtration), which states that the best
encourage the development rests on inequality that is created with policies that favor
the concentration of income, wealth and resources in the wealthier sectors. These
then invest their capital creating benefits to the rest of the population, by filtration. Therefore equality is good for economic growth. To get a larger share of income to middle-class populations resulting in increased growth.
If we accept that this is a top model, then we must include finding
greater equity, not only moral arguments based on social justice, or ethics, but
also more effective economic stimulus. As the economist Joseph says
E. Stiglitz, "is to understand a basic fact that being sensitive to the welfare of others
citizen is not just good for the soul, it's good business. "

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In the underdeveloped countries the most wealthy inhabitants are bound to keep earning money while the poor sectors remain just like they are. However, when the country starts to truly develop, the situation changes (otherwise there would be no progress). Of course there could be huge differencies in salaries even when the whole country is developed and its citizens live well. But this is not so common in real life. When we look to the countries that are considered the most developed, we see an outstanding middle class, and then much smaller sectors above and below, which means low inequality rates. Therefore economic development and inequality go in opposite directions. 

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Simon Kuznets, who won the Nobel Prize in Economy in 1971, determined in one of his studies, known as “Kuznets Curve”, that Economic Development and Economic Inequality run in the same direction for a certain period of time, and after it start to run in opposite directions, once some standard of living is reached. This theory can also be used to explain the behaviour of pollution and Economic Development, obtaining identical results theoretically.

 

However, the reality has shown some deviations from the given standard of the curve. The first is based on the historical data of Spain during the current democratic period, starting in 1978. By observing the data is clearly determined that the more Economic Development Spain has, means less Economic Inequality for the population.

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In many situations the determinant of highly developed country is large middle class, therefore economic develoment cannot go hand in hand with inequality. it, on the contrary, reduces gap between social classes and provides respectable life to larger amount of people.

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Economic inequality and economic development go in oppost directions. We should take into account the time factor. 

As we have seen in class with the Kuznets Curve what happened in Spain proves that both the economic inequality and the economic development go in opposite directions.

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It goes on opposite directions, when you get economic development you have to fight harder against the inequality to try to share all the new resources with all your population, wich is easy when you have nothing, and we can find good examples of that like Sweeden or Norway but another bad examples of rich countries with a lot of inequality like Dubai.

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It goes totally in the opposite direction. The study of the economic growth of nations, it is imperative that we become more familiar with findings in those related social disciplines that can help us under- stand populationgrowthpatterns, the nature and forces in technological change, the factors that determine the characteristics and trends in political institutions, and generally patterns of behavior of human beings-partly as a biological species, partly as social animals. Effective work in this field necessarily calls for a shift from market economics to political and social economy. 

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While it is hard to define what inequality means in a very precise and punctual mannner, there is no denying the fact that economic inequality influnces the economic development process. 

In the study "Economic Growth and Income Equality" (1955), Simon Kuznets compared the ratio between the shared income of the richest 20% of the population and the shared income of the poorest 60% of the population in two categories of states: developing economies and already developed states. Kuznets found that the level of inequality in developed economies was significantly lower than in developing states. 

As a result of these findings, Kuznets came to the conclusion that economic development does not have the same effect on all categories of individuals. In a primary phase, the upper categories have more to gain, while other groups are left to catch up. In the first stage of economic development, inequality levels are higher and as the process takes its course, inequality is reduced.

In other words, if we chose to use income per capita as an indicator of economic develpment, we will find that the initial step of the development process is characterized by rising inequality and as development continues, inequality will decrease. 

The inverted-U hypothesis developed by Kuznets was also applied by Felix Paukert, who compared fifty-six countries according to their GDP per capita. His findings confirm the fact that inequality and economic development are intertwined and that, in most cases, economic disparities are more significant in underdeveloped or developing countries.

To conclude, economic inequality and development do go hand in hand to a certain point. After the development process is completed, the rise of inequality affects the stability of the system.

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