Abstract

This study aims to identify the factors affecting economic inequality in emerging seven (E7) countries. Within this framework, first, a wide literature review has been made and 12 different criteria which are thought to affect economic inequality have been determined. These criteria were weighted according to their importance with the help of interval type-2 (IT2) fuzzy Decision-Making Trial and Evaluation Laboratory (DEMATEL) method. Then, by using these weighted criteria, the E7 countries were ranked according to economic equality performance with IT2 fuzzy Multi-Objective Optimization by Ratio Analysis (MOORA) and IT2 fuzzy Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) methods. The findings show that fair taxation, the equality of education provided by the state, and the uncontrolled growth of financial markets have a significant effect on the economic inequality. On the other side, Russia and China are the most successful countries in terms of economic equality, whereas India and Brazil have the worst performances. While considering these results, it can be said that the taxation system must be fair to eliminate the economic inequality. For this purpose, E7 countries should implement direct taxes, such as wealth tax to transfer funds from the rich to middle- and low-income groups. In addition, these countries should offer equal education opportunities to all citizens which affects their future income level. Finally, legal authorities should make the necessary arrangements and prevent excessive risk of financial system in the country so that the financial system in the country can be maintained in a healthy manner.

Highlights

  • Unfair income distribution and poverty are among the most important issues on the world economic agenda

  • interval type-2 (IT2) fuzzy Decision-Making Trial and Evaluation Laboratory (DEMATEL) approach is used to identify the significance of the dimensions and criteria that lead to economic inequality

  • To understand the relative performance of E7 countries with respect to economic equality, IT2 fuzzy Multi-Objective Optimization by Ratio Analysis (MOORA) and IT2 fuzzy TOPSIS methods are taken into consideration

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Summary

Introduction

Unfair income distribution and poverty are among the most important issues on the world economic agenda. As can be seen here, unfair income distribution is an economic and a social problem. When income is distributed unfairly in a country, there is an increase in the number of poor in that country. This situation will negatively affect the national economy (Leong et al, 2018). Economic inequality is one of the major problems facing countries in economic terms. Increasing economic inequality makes the unemployment problem permanent and adversely affects long-term economic growth. For this situation, the significant point is how this inequality is measured

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