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Inequalities and Growth in the Southern African Customs Union (SACU) Region

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  • Olivier Basdevant
  • Dalmacio Benicio
  • Yorbol Yakhshilikov

Abstract

This paper applies the work of Berg and Ostry (2011) to the SACU region, to identify how inequalities have played a role in growth in each of these countries, and elaborates policy options to mitigate the effects of inequalities and foster growth. Lower income inequalities could lead to significant gains, as SACU countries could almost double the duration of their growth periods, with much lower inequalities. While reducing inequalities may be desirable, the design of policies to achieve such objective is not trivial. Policies targeting income inequalities at the sources are expected to be the most effective to reduce inequalities and promote growth. However, direct redistribution, if carefully crafted can also be very effective in reducing inequalities while limiting its potentially negative impact on growth.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 12/290.

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Length: 22
Date of creation: 10 Dec 2012
Date of revision:
Handle: RePEc:imf:imfwpa:12/290

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Related research

Keywords: Economic growth; Southern Africa; Income distribution; Cross country analysis; Inequalities; SACU; human capital; income inequalities; gini; gini coefficient; redistributive policies; access to education; child mortality; vulnerable groups; wealth distribution; provision of education; inequality-growth relationship; persistent poverty; preferential treatment; reduced poverty; racial inequality; labor market; increasing inequalities; social protection; epidemic; inequalities in education; inequality of opportunity; industrial activities; distributive politics; lack of access; ethnic groups;

References

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  1. de la Fuente, Angel & Doménech, Rafael, 2000. "Human Capital In Growth Regressions: How Much Difference Does Data Quality Make?," CEPR Discussion Papers 2466, C.E.P.R. Discussion Papers.
  2. N. Gregory Mankiw & David Romer & David N. Weil, 1990. "A Contribution to the Empirics of Economic Growth," NBER Working Papers 3541, National Bureau of Economic Research, Inc.
  3. Oded Galor & Joseph Zeira, 2013. "Income Distribution and Macroeconomics," Working Papers 2013-12, Brown University, Department of Economics.
  4. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June.
  5. Cynthia B. Lloyd & Paul Hewett, 2009. "Educational inequalities in the midst of persistent poverty: Diversity across Africa in educational outcomes," Journal of International Development, John Wiley & Sons, Ltd., vol. 21(8), pages 1137-1151.
  6. Galor, Oded & Moav, Omer & Vollrath, Dietrich, 2008. "Inequality in Land Ownership, the Emergence of Human Capital Promoting Institutions and the Great Divergence," CEPR Discussion Papers 6751, C.E.P.R. Discussion Papers.
  7. Romain Wacziarg & Karen Horn Welch, 2003. "Trade Liberalization and Growth: New Evidence," NBER Working Papers 10152, National Bureau of Economic Research, Inc.
  8. Piketty, Thomas, 1997. "The Dynamics of the Wealth Distribution and the Interest Rate with Credit Rationing," Review of Economic Studies, Wiley Blackwell, vol. 64(2), pages 173-89, April.
  9. Marisa Coetzee, 2011. "Finding the benefits: Estimating the impact of the South African child support grant," Working Papers 230, Economic Research Southern Africa.
  10. Glomm, Gerhard & Ravikumar, B, 1992. "Public versus Private Investment in Human Capital Endogenous Growth and Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 818-34, August.
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