
Contents
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17.1 Economic Reforms and their Impact over the Last Three Decades 17.1 Economic Reforms and their Impact over the Last Three Decades
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Macroeconomic stabilization Macroeconomic stabilization
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Liberalization of the domestic markets and international transactions Liberalization of the domestic markets and international transactions
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17.2 Impact of the Economic Reforms on Growth, Income Distribution, and Poverty 17.2 Impact of the Economic Reforms on Growth, Income Distribution, and Poverty
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17.3 Concepts of Income and the Shape of Alternative Distributions of Income 17.3 Concepts of Income and the Shape of Alternative Distributions of Income
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Income concepts Income concepts
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Alternative distributions of income Alternative distributions of income
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17.4 Sources of Change in the Distribution of Disposable Income 17.4 Sources of Change in the Distribution of Disposable Income
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17.5 Liberalization of the Labour Market 17.5 Liberalization of the Labour Market
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Liberalization of a dualistic labour market with a small formal sector Liberalization of a dualistic labour market with a small formal sector
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Wage liberalization in a unified labour market Wage liberalization in a unified labour market
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Wage liberalization with heterogeneous workers Wage liberalization with heterogeneous workers
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17.6 Domestic Financial Liberalization 17.6 Domestic Financial Liberalization
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17.7 Reform of Taxation and Social Transfers 17.7 Reform of Taxation and Social Transfers
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17.8 Liberalization of Foreign Trade 17.8 Liberalization of Foreign Trade
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17.9 Alternative Explanations of the Distributive Effects of Trade Liberalization 17.9 Alternative Explanations of the Distributive Effects of Trade Liberalization
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Production factors intensity and income distribution Production factors intensity and income distribution
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Trade liberalization in countries exporting commodities whose prices are subject to shocks Trade liberalization in countries exporting commodities whose prices are subject to shocks
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Third-party effects Third-party effects
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Trade liberalization and imports of skill-enhancing investment goods Trade liberalization and imports of skill-enhancing investment goods
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Protectionism in trading partners and interaction between trade and capital account liberalization Protectionism in trading partners and interaction between trade and capital account liberalization
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17.10 Capital Account Liberalization 17.10 Capital Account Liberalization
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17.11 Overall Impact of the Reforms 17.11 Overall Impact of the Reforms
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17.11 Relationship between Income Inequality and Economic Growth 17.11 Relationship between Income Inequality and Economic Growth
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Theories positing a positive relation between inequality and growth Theories positing a positive relation between inequality and growth
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Theories positing a negative relation between inequality and growth: the median voter model Theories positing a negative relation between inequality and growth: the median voter model
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Inequality, incomplete financial markets, and decreasing returns to investment Inequality, incomplete financial markets, and decreasing returns to investment
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Inequality and the inability of governments to conduct timely stabilization policies Inequality and the inability of governments to conduct timely stabilization policies
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Inequality and government inability to provide basic public goods Inequality and government inability to provide basic public goods
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Inequality and the erosion of social capital and collective action Inequality and the erosion of social capital and collective action
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Rising inequality, household indebtedness, financial crises, and further inequality increases Rising inequality, household indebtedness, financial crises, and further inequality increases
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Theories positing a concave relation between inequality and growth Theories positing a concave relation between inequality and growth
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17.12 Concluding Remarks 17.12 Concluding Remarks
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References References
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17 Internal and External Liberalization, Inequality, Growth, and Poverty
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Published:March 2020
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Abstract
This chapter presents a general framework to analyse the impact on inequality, growth, and poverty of the internal and external structural adjustment reforms introduced in a large number of the developing, transitional, and developed countries over the last three decades. It then discusses the main theories of the relation between inequality and growth and shows that the achievement of given poverty targets is influenced favourably by a decline of income inequality. This debate has acquired considerable relevance with the adoption in 2015 by the United Nations General Assembly of the Sustainable Development Goals strategy that focuses—inter alia—on eradicating poverty by 2030 and reducing income inequality to tolerable levels.
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