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An econometric analysis of the bifurcation of within-country inequality trends in Sub-Saharan Africa, 1990–2011

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  • Cornia, Giovanni Andrea

Abstract

The paper documents and explains the income inequality changes that have occurred in Sub-Saharan Africa over 1991-2011. After reviewing the causes of post-Independence income polarization, it shows that during the 2000s 17 countries recorded an inequality decline and 12 a rise. The paper then explores the determinants of this trend bifurcation by reviewing the changes recorded in a long list of inequality determinants and by testing their relevance by means of a multivariate macro-panel regression. The results indicate that the growth rate of GDP/capita is unrelated to inequality while its composition is closely associated with it. Improvements in the distribution of human capital improved inequality while lack of land reforms and high population growth increased it. Changes in global conditions had a mixed effect. While remittances and rising world agricultural prices appear to have been equalizing, rising FDI in extractive industries and a surge of terms of trade in resource-rich economies were regressive. ODA changes were statistically non-significant, but debt cancellation in HIPC-eligible countries reduced the Gini perceptibly. Domestic policy changes had a mixed effect. Where direct taxation and targeted social expenditure rose the impact on inequality was favourable. Among the macro-policies, trade liberalization was un-equalizing as it reduced the value added share of manufacturing, while a stable macroeconomy, fall in inflation and competitive exchange rate reduced income polarization. Exogenous shocks generated contrasting effects: the recent fall in HIV/AIDS incidence reduced inequality modestly, while conflict intensity increased it. Our estimates do not find a clear distributive effect of democratization. The paper concludes stressing the need to strengthen the informational basis to analyse various aspects of inequality, and to improve our understanding of the politics of distributive policies.

Suggested Citation

  • Cornia, Giovanni Andrea, 2016. "An econometric analysis of the bifurcation of within-country inequality trends in Sub-Saharan Africa, 1990–2011," UNDP Africa Reports 267781, United Nations Development Programme (UNDP).
  • Handle: RePEc:ags:undpar:267781
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    References listed on IDEAS

    as
    1. François Bourguignon & Mark Sundberg, 2007. "Aid Effectiveness – Opening the Black Box," American Economic Review, American Economic Association, vol. 97(2), pages 316-321, May.
    2. Giovanni Cornia & Bruno Martorano, "undated". "Building the integrated inequality database and the seven sins of inequality measurement in Sub-Saharan Africa," UNDP Africa Policy Notes 2016-01, United Nations Development Programme, Regional Bureau for Africa.
    3. Sachs, J-D & Warner, A-M, 1995. "Natural Resource Abundance and Economic Growth," Papers 517a, Harvard - Institute for International Development.
    4. Dilip Ratha & Sanket Mohapatra & Caglar Ozden & Sonia Plaza & William Shaw & Abebe Shimeles, 2011. "Leveraging Migration for Africa : Remittances, Skills, and Investments
      [Optimisation du phénomène migratoire pour l’Afrique : Envois de fonds, compétences et investissements]
      ," World Bank Publications, The World Bank, number 2300.
    5. Christophe J. Nordman & François-Charles Wolff, 2009. "Gender differences in pay in African manufacturing firms," Working Papers hal-00421227, HAL.
    6. E.H.P. Frankema, 2005. "The Colonial Origins of Inequality: Exploring the Causes and Consequences of Land Distribution," Ibero America Institute for Econ. Research (IAI) Discussion Papers 119, Ibero-America Institute for Economic Research.
    7. Cornia, Giovanni Andrea & Stewart, Frances (ed.), 2014. "Towards Human Development: New Approaches to Macroeconomics and Inequality," OUP Catalogue, Oxford University Press, number 9780198706083.
    8. Katarina Juselius & Niels Framroze Møller & Finn Tarp, 2014. "The Long-Run Impact of Foreign Aid in 36 African Countries: Insights from Multivariate Time Series Analysis," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 76(2), pages 153-184, April.
    9. Denis Cogneau & Thomas Bossuroy & Philippe De Vreyer & Charlotte Guénard & Victor Hiller & Phillippe Leite & Sandrine Mesplé-Somps & Laure Pasquier-Doumer & Constance Torelli, 2006. "Inequalities and equity in Africa," Working Papers DT/2006/11, DIAL (Développement, Institutions et Mondialisation).
    10. Mwangi S. Kimenyi, 2006. "Ethnicity, Governance and the Provision of Public Goods," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 15(1), pages 62-99, April.
    11. Giovanni Andrea Cornia & Bruno Martorano, "undated". "The dynamics of income inequality in a dualistic economy – Malawi," UNDP Africa Policy Notes 2017-01, United Nations Development Programme, Regional Bureau for Africa.
    12. Degol Hailu, 2012. "Is the Distribution of Foreign Aid MDG-sensitive?," Working Papers 111, United Nations, Department of Economics and Social Affairs.
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    Keywords

    International Development;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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