Recognizing Development beyond Economic Growth: By analyzing impact of Inequality on Development

Abstract

The idea of development has transformed in recent decades from measuring per capita income to improving quality of life of the people. The traditional advocacy for Western models of development has proven to be futile when many developing countries (especially East Asian Tigers) have shown that one size does not fit all and there are other ways to achieve growth as well. However, global economic development also accompanied with another incidence called inequality through distributional bias and limited opportunities in last few decades. When national income is not distributed proportionately to non-economic sectors, the economic success fails to benefit sustained development in a country. This paper focuses on impact of such inequality on human development, poverty and growth. Countries with high ranks in Gross National Income (GNI) often turn into lower rankings in Human Development Index (HDI) when distribution is below the standard in health and education due to lack of pro-poor policy measures. On the other hand, poverty reduction slows down and incident of extreme poverty also rises in regions where inequality is high. Besides, rising inequality with declining share of bottom 40% of population results into inability of economic system to create jobs and such weak growth governance leads to lowering of growth rate in the long run. This paper is articulated based on secondary materials from different sources in order to study impact of inequality. It provides further opportunity to work in this subject with much broader and primary data in future.