Contributed Indexing: Indexing Agency: PIP Local ID #: 800636. Indexing Agency: POP Local ID #: 00076610.
Keywords: Brazil; Colombia; Costa Rica; Developing Countries*; Development Policy*; Economic Development*; Economic Factors; Economic Model*; India; Korea; Mexico; Models, Theoretical; Peru; Philippines; Policy; Research Methodology; Socioeconomic Factors; Socioeconomic Status*; Sri Lanka; Taiwan; Turkey; Yugoslavia
Note: TJ: Finance and Development
Local Abstract: [PIP] Some development strategists equate progress with economic growth and others consider increased equity in income distribution or a reduction in poverty as indicators of progress. This report examined the empirical relationship between economic growth and income distribution using data derived from a number of recent comparative studies. Various studies supported the Kuznets hypothesis, which states that during the early phases of development income distribution worsens and improves during the later phases. These studies demonstrated that as per capita income increases in poor countries, income distribution worsens until the per capita income reaches the $800 level. After that level is reached, income distribution generally improves. In a study of 11 countries, the relationship, in recent years, between income growth for the rich and for the poor, and income growth for the country as a whole was examined. Of the 11 countries, Taiwan, Yugoslavia, Sri Lanka, Korea, and Costa Rica were ranked as good performers, since more than 30% of the increment in national income was allocated to the poorest 60% of the population. The countries of India, Philippines, Turkey, and Colombia were ranked as intermediate performers since 20-30% of the increment in national income went to the poorest 60%. Poor performance countries were Brazil, Mexico, and Peru. In these countries less than 20% of the income increment was allocated to the poorest 60%. A table provided comparative national income and income distribution data for the 11 countries. These findings did not permit an assessment of different development strategies; however, they did indicate that: 1) some countries, such as Taiwan, Yugoslavia, and Korea, achieved both rapid growth and greater income distribution equity; and that 2) although some countires, such as Sri Lanka, which stressed equity, grew less rapidly than other countries, such as Mexico, which stressed economic growth, the poor fared much better in the former countries than in the latter countries. The conclusion was reached that proverty must be reduced by: 1) improving income distribution; 2) promoting economic growth; and 3) reducing population growth. Efforts must be directed toward preventing the poor from falling behind the rich as development proceeds.
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