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Inequality in Developing Economies: The Role of Institutional Development

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  • AMENDOLA, Adalgiso

    () (CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy)

  • EASAW, Joshy

    () (Department of Economics, University of Bath)

  • SAVOIA, Antonio

    () (University of Exeter Business School)

Abstract

This paper studies the distributive impact of institutional change in developing countries. In such economies, economic institutions, such as property rights systems, may act to preserve the interests of an influential minority, but this depends crucially on the level of political equality. For example, dominant classes can control key-markets, access to assets and investment opportunities, especially if they enjoy disproportionate political power. We test this hypothesis using cross-section and panel data methods on a sample of low- and middle-income economies from Africa, Asia and Latin America. Results suggest that: (a) increasing the protection of property rights increases income inequality; (b) such an effect is larger in low-democracy environments; (c) a minority of countries have developed a set political institutions capable of counterbalancing this effect.

Suggested Citation

  • AMENDOLA, Adalgiso & EASAW, Joshy & SAVOIA, Antonio, 2010. "Inequality in Developing Economies: The Role of Institutional Development," CELPE Discussion Papers 116, CELPE - Centre of Labour Economics and Economic Policy, University of Salerno, Italy.
  • Handle: RePEc:sal:celpdp:0116
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Kunal Sen, 2014. "Inclusive Growth: When May We Expect It? When May We Not?," Asian Development Review, MIT Press, vol. 31(1), pages 136-162, March.
    2. Alexander M. Yarkin, 2014. "Endogenous Property Rights, Conflict Intensity And Inequality In Asymmetric Rent-Seeking Contest," HSE Working papers WP BRP 72/EC/2014, National Research University Higher School of Economics.
    3. Adalgiso Amendola & Joshy Easaw & Antonio Savoia, 2013. "Inequality in developing economies: the role of institutional development," Public Choice, Springer, vol. 155(1), pages 43-60, April.
    4. José María, Larrú, 2012. "La relación entre la ayuda al desarrollo y la desigualdad. Evidencia y justificación teórica
      [Aid and inequality relationship. Evidence and theoretical justification]
      ," MPRA Paper 38857, University Library of Munich, Germany.
    5. Pantelis Kammas & Vassilis Sarantides, 2015. "Do dictatorships redistribute more?," Working Papers 2015001, The University of Sheffield, Department of Economics.
    6. Bazoumana Ouattara & Samuel Standaert, 2017. "Inequality And Property Rights, Revisited," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 17/935, Ghent University, Faculty of Economics and Business Administration.
    7. Ahmad, Mahyudin, 2016. "Middle income trap and income inequality: Empirical evidence on the distributional effect of economic liberalization and political regime," MPRA Paper 76437, University Library of Munich, Germany.
    8. Balcazar Salazar,Carlos Felipe, 2015. "Long-run effects of democracy on income inequality : evidence from repeated cross-sections," Policy Research Working Paper Series 7153, The World Bank.
    9. Pantelis Kammas & Vassilis Sarantides, 2016. "Fiscal redistribution around elections when democracy is not “the only game in town”," Public Choice, Springer, vol. 168(3), pages 279-311, September.

    More about this item

    Keywords

    inequality; developing economies; institutions; property rights; democracy;

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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