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Social determinants of economic growth: income inequality


Social determinants of economic growth: income inequality

Gafarova L.A.

Incoming article date: 14.12.2014

The article is devoted to a problem of influence of an inequality in distribution to economic growth. This factor is considered in the context of approaches to research of the transmission gear of influence of an inequality on economic growth. In article results of the empirical analysis which is carried out by the author, influences of an inequality on dynamics of economic growth are, the conclusion about the importance of this factor and conditions of its influence locates. Identification of average force of correlation between Gini's coefficient and dynamics of economic growth (0,354) that is caused by impact of the whole range of various factors on economic growth along with the considered factor became result of the analysis. Thus correlation is both positive, and negative. In the range of the size of Gini coefficient approximately to 0,445 growth of an inequality in distribution at first causes increase of rates of economic growth, that is direct dependence between these indicators is observed. It is connected, in our opinion, with growth of concentration of the capitals and existence of the separate points of growth caused by unique types of resources and a great demand on them. In the range of the size of Gini coefficient from 0,445 to 0,510 rates of economic growth don't change that is connected with big impact of negative influence of an inequality, than other factors. At high level of an inequality (Gini's coefficient more than 0,510) to increase in an inequality there is a decrease in growth rates. Thus, the countries with considerable degree of an inequality in the income have smaller opportunities of economic growth, than the country with low level of differentiation.

Keywords: income distribution, inequality, factor, conflict of interests, earned income, economic growth, gross domastic product, economic stability