The relationship of economic growth, income inequality and poverty: a study on developing countries

Abstract

This study aims to examine the relationship between income inequality, poverty and economic growth in selected eight developing countries determined by the World Bank's Atlas method between 2000 and 2020. The problem of the study is the increasing and deepening income inequality and poverty in developing countries in recent years. In this context, panel data analysis was chosen to reveal the relationship between income inequality, poverty and economic growth in developing countries, and a wide data set such as gini coefficient, head number index, per capita national income, democracy index, human development index and misery index was used. Income inequality, poverty and economic growth were analyzed with three different models) and compared with each other. Considering the results of the analysis, the Durbin-Hausman cointegration test was conducted to reveal the existence of a long-term relationship between the variables, and the existence of a long-term cointegration relationship between the variables was determined. According to the results of Dumitrescu Hurlin causality test, a bidirectional causality relationship was found between the variables. According to panel regression analysis, it was determined that while per capita increases in national income increase income inequalities, increases in democracy and per capita income reduce poverty, and increases in democracy index increase per capita income. According to the results, various social, economic and political policies have been proposed to reduce income inequality and poverty and increase economic growth.