Education, Social
Equality, and
Economic
Growth: A View
of the Landscape
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Equality and Economic Growth - Banking - Lecture Slides, Slides of Banking and Finance
Banking is an ever green field of study. In these slides of Banking, the Lecturer has discussed following important points : Equality and Economic Growth, The Landscape, Investment, Education, Sources of Growth, Scheme of Things, Investment, Growth Is Exogenous, Stable Politics, Initial Income
Typology: Slides
2012/2013
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Education, Social
Equality, and
Economic
Growth: A View
of the Landscape
The Scheme of Things:
Sources of Growth
Investment Education
Growth
+ denotes a positive effect in the direction shown
The Scheme of Things:
More Sources of Growth
Investment x Education
Growth
+ denotes a positive effect in the direction shown
The Scheme of Things:
More Sources of Growth
Investment x Education
Growth
+ denotes a positive effect in the direction shown
Arthur Lewis: x is trade, stable politics, good weather Then Solow came along and said: growth is exogenous
The Scheme of Things:
Inflation and Growth
Investment
Initial Income Natural Capital
Inflation Education
Growth
+ denotes a positive effect in the direction shown
- denotes a negative effect in the direction shown
My first x was inflation (1976, 1991, 1996, 2001)
The Scheme of Things:
Resources and Growth
Investment
Initial Income Natural Capital
Inflation Education
Growth
The Scheme of Things:
Aid and Growth
Investment
Initial Income Natural Capital
Foreign Aid Education
Growth
A new x will be foreign aid vs. FDI (with Radetzki et al.)
- (^) –
The Scheme of Things:
Inequality and Growth
Investment
Initial Income Natural Capital
Inequality Education
Growth
Today x is inequality (with Zoega)
-
Background
Commonly held view:
Economic efficiency and social equality are incompatible, like oil and water
Okun’s “big trade-off”
Redistribution is costly Blunts incentives to work and save and invest in education Leaky-bucket analogy
Background: More
recent arguments
1. Political economy
Inequality may trigger demands for redistribution that hurts growth It may also trigger demands for more and better education that helps growth
2. Social cohesion
Inequality may lead to social conflict and political instability that hinder growth It may also lead to economic volatility
Research strategy
Study 87 industrial and developing
countries from 1965 to 1998
Look for cross-country patterns in data
from the World Bank
Inequality and growth Inequality and education Education and growth
Dig deeper through regression analysis
Inequality and economic
growth
75 countries
What is the empirical evidence?
y = -0,0799x + 2, R^2 = 0,
0
2
4
6
0 20 40 60 80
Gini coefficient
Per capita economic growth 1965-98, adjusted for
initial income
A 12 point increase in the Gini index goes along with a decrease in per capita growth by nearly 1% per year.
r = rank correlation
r = -0.
The Gini index and the
20/20 ratio
The Gini index is closely related to the
20/20 ratio
Gini = 25 ⇒ ratio = 3 (Nordic countries) Gini = 30 ⇒ ratio = 4 (Germany, Greece) Gini = 35 ⇒ ratio = 6 (Britain) Gini = 40 ⇒ ratio = 8 (US, China, Russia) Gini = 50 ⇒ ratio = 15 (Nigeria) Gini = 60 ⇒ ratio = 26 (Brazil)
Each ten-point increase in the Gini index
roughly doubles the 20/20 ratio