Economic Growth and Income Distribution
The recent surge of interest of economists in the distribution of income in the developing countries during their process of growth has produced considerable work on the subject.1 For instance, there are many concepts of income distribution: functional distribution by factor services, regional and geographical distribution, and size distribution by person or household. It is size distribution in which most development economists are interested and that is also the concept studied here. Of the various concepts of distribution, size distribution is perhaps the most satisfactory indicator of how increases in welfare are distributed among the people. The relationship between changes in income distribution by size and economic growth is of special interest to development economists as after a decade or more of rapid growth in some developing countries, they begin to worry not so much about the rate of increase in output but more about to whom these increases in output go.2 It is clear that economic growth can do more harm than good if the benefits of growth are confined to a small group of people. Since the 1960s, some economists have become dissatisfied with using the criterion of growth of national income as the only indicator of economic development.3 More equal income distribution in the process of development has been increasingly regarded as highly desirable even if this means a reduction in the rate of output growth.
KeywordsIncome Inequality Income Distribution Gini Coefficient Cash Holding Income Share
Unable to display preview. Download preview PDF.