Inequality, Poverty and Development With an Application to Fiji

Description:

The object of this paper is to look at the relationship between equality, development and growth for a cross section of countries, and for Fiji, in particular. It is argued that there is no clear cross country relationship, despite the orthodox voew that inequality promotes saving and hence growth. In the particular case of Fiji, the quantitative magnitude of this linkeage is shown to be small. The paper also looks at the possible growth costs of a strategy of poverty eradication for Fiji. Some illustrative calculations are presented, which indicate that if 100 percent targeting were possible, and if poverty eradication were to be financed entirely out of taxation of the top six deciles, the growth rate would be reduced from its 3.2 percent per annum average over the past two decades to 3.09 percent per annum. If imperfect targeting leads to a 50 percent leakage, the poverty eradication would lead to a reduction of the growth rate to 2.97 percent. In the latter scenario, the tradeoff would be immediate poverty eradication versus an income shortfall, for the top six deciles, of under 5 percent at the end of twenty years. It should be emphasized, however, that these calculations are illustrative and preliminary, and do no more than support the need for careful further research.

Location:

Fiji

Format:

text

Collections:

Uppsala University

Content partner:

Uppsala University

Availability:

Not specified