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

  • Olivier Basdevant
  • Dalmacio Benicio
  • Yorbol Yakhshilikov

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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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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  1. Wacziarg, Romain & Welch, Karen Horn, 2003. "Trade Liberalization and Growth: New Evidence," Research Papers 1826, Stanford University, Graduate School of Business.
  2. Marisa Coetzee, 2011. "Finding the benefits: Estimating the impact of the South African child support grant," Working Papers 230, Economic Research Southern Africa.
  3. Oded Galor & Omer Moav & Dietrich Vollrath, 2009. "Inequality in Landownership, the Emergence of Human-Capital Promoting Institutions, and the Great Divergence," Review of Economic Studies, Oxford University Press, vol. 76(1), pages 143-179.
  4. Oded Galor & Joseph Zeira, 2013. "Income Distribution and Macroeconomics," Working Papers 2013-12, Brown University, Department of Economics.
  5. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June.
  6. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 407-37, May.
  7. Angel de la Fuente & Rafael Doménech, 2006. "Human Capital in Growth Regressions: How Much Difference Does Data Quality Make?," Journal of the European Economic Association, MIT Press, vol. 4(1), pages 1-36, 03.
  8. 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.
  9. 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.
  10. 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.
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