BEE 3052 - Inequality and Development in Developing Countries

This essay examines the complex relationship between inequality and development, particularly in developing nations. It defines economic development as the process of improving living standards, health, education, and overall well-being, while economic inequality refers to the unequal distribution of income and opportunities. The essay identifies constraints hindering welfare improvement in developing countries, including microeconomic inefficiencies, structural imbalances, rapid population growth, lack of capital, corruption, and inadequate financial markets. It also outlines key features of inequality and underdevelopment, such as general poverty, dependence on agriculture, underutilized resources, lack of industries and technology, inadequate infrastructure, high population growth, and socio-cultural differences. The essay further touches upon the presence of migrant workers and the impact of environmental and climate change. The document is available on Desklib, a platform providing study tools for students, including solved assignments and past papers.

Running head: ECONOMICS ESSAY
ECONOMICS ESSAY
Name of the Student
Name of the University
Author Note

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Essay topic: Inequality and development
Introduction
The high levels of inequality tend to reduce the growth rate and the rate of development
which tends to exist in the relatively poor and developing countries but encourage growth and
prosperity as present in the developed countries. According to Amin (2017), the income equality
and distribution forms a critical part of the growth and development of a nation, however, in
most of the developing nations it has been observed that, there has been a slow rate of growth
and development because of the high levels of income inequality which exists in the society.
There exists a huge debate whether the different economic policies should aim to ensure that
everyone in the society performs better rather than concentrating on seeing to it that, the narrow
income gap is improved upon. However, there exists other critiques and economists who state
that the different economic policies as present in the different countries should concentrate on the
focus on removing the income inequality gap as it tends to limit the development of the nation.
Hence, it can be understood that inequality and development are related and that one hinders the
other (Savage ,2016). The primary purpose of the essay is to present the reasons why the
Inequality and Development can be understood to be the major problems which are surrounding
a developing nation and the reasons which acts as a constraint in the overall welfare of the
people who are largely connected with the country at large. In addition to this, the major features
related to the Inequality and Developed will be discussed which will then be followed by Policy
recommendations on the same.

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Analysis
Inequality and development
The economic development can be rightfully defined as the procedure whereby the
emergent economies all around the globe have become considerably advanced in nature.
According to Schumpeter (2017), it can also be described as a process with respect to which the
different countries with the low living standards tend to change and become nations with quite
high living standards. However, the development of a country is not only restricted to the
economic growth of a country but can be also stated to be the improvement in the overall health,
wellbeing as well as the educational level of the general population. According to Savage
(2016), it is generally observed that when a country is in its path to development, there exists a
shift in the overall occupation of the people from agriculture to the industry and then to the
services. Moreover, the life expectancy of the populations also improves along with a positive
shift in the levels of literacy rate, income of the worker, overall health and the span of life. Many
experts like Van den Berg (2016), describe the procedure as a manner in which the society
becomes advanced and social as well as the economic standards and conditions improve in the
long run.

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Figure 1: The share of income in the developing countries
(Source: Van den Berg, 2016).
According to Schumpeter (2017) , the economic development can be considered to be
quite different from that of the economic development which is concerned with the overall
growth of the economy with respect to healthcare, housing, academic level and access to the
internet and good infrastructure as well. On the other hand, the economic growth is just
concerned with the maintenance of the economic condition of the country. With respect to this, it
is crucial to understand that Economic growth is measured with the Gross Domestic product and
making the economy bigger in size whereas, the economic development is measured with respect
to the GDP of a country and the manner in which the different people have been affected and the
kind of living standard which they share.
Inequality
On the other hand Rothman (2015), economic inequality can be described as the manner
in which the income as earned by the different people present is unequal in nature and there
exists a sense of differentiation between the different groups which are existent in the society and

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the different people can be often stated to be trapped in poverty with a very little chance of
climbing up the social ladder. However, all the individuals must be provided with opportunity to
prosper in life and improve their standard of living. Hence, it can be stated that due to this
reason, the government should aim to remove the unequal distribution. In addition to this, the
inequality which exists in the form of the unequal distribution of the incomes and the opportunity
provided to them and should be taken up as a relevant point of concern whereby people re not
provided with an opportunity to climb up the social ladder.
Constraints in improving welfare of the people concerned
Hence, it can be understood that in case the people who are concerned can be largely
stated to be the people who are below the poverty the poverty line and have been largely denied
the opportunity to live freely and to develop themselves and to rise above the level of poverty
which they are currently facing (Platteau, 2015). Many economists believe that the primary
reason why the different individuals as present in the country are not able to successfully able to
overcome the social as well as the economic ladder because of the lack of resources. As the
resources present in the industry and in the different countries can be stated to be very limited in
nature and it is for this reason, that there exists a constraint to the particular situation whereby the
welfare of the people is concerned. As discussed earlier, there lies a constraint with respect to
whether a country should aim to reduce the income gap which exists between the different
people or to ensure that the resources are used for the betterment of the entire society at large
(Piketty, 2015). Hence, as there are a restricted number of options for the people as present in
the society, there exists a certain level of constraint to the welfare. However, the section will be
discussing certain constraints as available in the developing countries which may then lead to the

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overall welfare of the people. These constraints may comprise of constraints like inefficiencies
with respect to the micro economy whereby there may exist an inefficiency relating to the
productivity, allocation of resources, social inefficiency and others.
Figure 2: The income inequality and redistribution in the different developing countries
(Source: Savage, 2016).
Moreover, another constraint which exists can be stated to be the constraint regarding the
imbalances as present in the structure of the overall economy. This means that not all sectors are
capable of engaging in adequate growth and in this aspect for the developing countries the
resources may be allocated to economies with a little growth potential (Reyes-García et al.,
2018). There may exist considerable failure which may tamper the economic development of the
society.
Another constraint which exists in the organization is the rapidly growing population as
present in the developing countries. It can be mentioned that as the population as present in the
developing countries have been growing consistently, it leads to constraint in the overall removal
of inequality and the fostering of growth because, the current resources are not enough for the
population to suffice by (Lockwood, 2015). Another constraint which is present in the economy
can be stated to be the constraint of the lack of real capital. This means that various economies

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do not have an appropriate access to savings, debts, absence of credit markets and the factor of
crowding out.
Moreover, many economists tend to argue that there also exists a constraint of Corruption
in the developing societies which have lead the degradation of the society and accumulation of
the economic as well as the social power in the hands of a few selected people (Klein, 2018). The
price mechanism is also weakened by the bribery and corruption which exists in the society.
Figure 3: The contrasting trends in Global and country inequality
(Source: Wade & Alacevich, 2018).
Lastly, according to Meara et al. (2015), another constraint which exists in the
developing countries that restricts the welfare of the people can be stated to be the constraint
relating to the inadequate financial markets. This means that, there exists considerable
information failure which tends to exist in the market and pushes up the interest rate and tends to
cause a sense of in efficiency in the target market. Hence, only if the developing countries will
be successfully able to solve these constraints, will it be able to remove the inequality and
development gap.
Major features of the inequality and lack of development in the developing countries

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The inequality and lack of development in the developing countries has certain common
characteristics and features which are shared by all the developing countries at large (Leigh &
Blakely, 2016). These features can be stated to be the features as follows. The first feature is the
general poverty, this means that, all the countries which are suffering from the problem of
inequality and development tend to suffer from General poverty whereby the standard of people
is considerably very low. The second feature of such economies can be stated to be that, there
exists high dependence on the agriculture, more than 70% of the people in the developing
countries like Brazil, India and other such countries are highly dependent on the agricultural
activities as the primary source of their income (Coale & Hoover, 2015). Moreover, states that
another feature of inequality in the developing society can be stated to be the underutilized
natural resources.
Although there may exist certain salient resources in the society but their exploration and
exploitation can be considered to be very limited in nature. In addition to this, another feature is
the lack of different industries as well as resources. Whereby the different industrial and
entrepreneurial activities contribute to less than 10% of the GDP. Moreover, there also exists a
lack of technology as well the presence of capital in the developing societies which then leads to
further improvement in the countries (Heckley, Gerdtham & Kjellsson, 2018).
Many economists as well as the different scholars state that, there exists inequality in the
sense that there tends to exist a lack of the basic infrastructures which can lead to the overall
development of the economy and cause a considerable sense of achievement. In addition to this,
there exists a high growth of population as present in the developing countries, and grows at the
rate of 3 per cent per annum. The young population constitutes a major section of the economy
and constitutes to around 40% of the economy at large (Furtado, 2018). The social cultural

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characteristics of the economic also tend to differ in nature. This means that, these individuals
tend to differ in terms of the social and cultural values and may have an influence on the
individual’s economic life patterns as well.
According to Piketty (1995), another feature which exists in the countries which have
been experiencing inequality and developing constraints can be stated to be that there exists a
large number of migrant workers as present in the society, who constitute of the front lines of the
inequality which is present in the developing countries. Atkinson and Morelli (2003) state that,
these developing countries experience large scale environment as well as climate change as these
countries tend to be burdened by the environmental degradation and the climate change. The
International NGOs and the organizations which watch out for such issues as present have
highlighted that, the primary reason why these problems tend to arise can be contributed to the
lack of awareness with respect to sustainability which can then cause threats to reverse the hard
fought gains to alleviating the poverty which is largely existent in the countries.
Moreover, there exists an unequal roles as well as the treatment of the men and women in
the society whereby there exists an unequal pay for the women and they are faced by a large
number of obstacles in order to survive in the general society.
Policy recommendations
In order to combat against these problems of inequality and development which tend to
exists in the society of the different developing counties, it can be mentioned that the formulation
of certain economic as well as the social policies would go a long way in ensuring that, the
inequality which tends to exists within the specific groups can be reduced and only when this
inequality which is present in the society will be removed, can the society march towards an

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overall economic development (Beltrán Tapia & Martinez-Galarrage, 2015). The
recommendations of the different policies will be made in the following section.
Firstly, there needs to be a policy which aims to empower the marginalized population.
This means that, there needs to exist an active participation of the minorities, the women and the
other marginalized group of individuals who are bearing the cost of inequality in the society.
Secondly, another policy which can be designed is the policy regarding, the overall welfare of
the children as present in the society which means that the young children as aged between 0-5
should be provided with specific healthcare, nutrition, education and other such amenities which
would lead to their overall welfare.
Moreover, Anand and Sen (2000), states that the different individuals should be
adequately provided with high quality education and workforce training which shall ensure that
he youth as present in the society will have an access to high quality education and so that there
exists no barriers with respect to the overall future of the youth as present in the country. Once
this is done, the policy should also center on ensuring that, there is considerable investment made
in the domain of Human capital whereby the different organizations as present in the society of
the developing countries need to realize that only when their workers will be empowered, will
the organization be able to find adequate success.
Blau (2016) also recommends that the formulation of Innovative programs may also be
a good policy which will then assists the different developing countries to fight against the
existing problems of inequality and development. These programs should center on the right
design and the provision of the right kinds of incentives which shall then lead to a redistribution
in the income policy and allow the less fortunate to make a smart investment.

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Conclusion
Therefore, from the given analysis, it needs to be understood that a major reason why the
different developing countries face the problem of limited growth and overall welfare can be
largely stated to be because of the Inequality and Development which exists in the society. The
given essay was based on the domain related to Inequality and Development which are
considered to be major issues of the developing societies. It is believed that inequality in the
income of the different individuals can be understood to be the major reason why there exists a
sense of lack of development as present in the society and with respect to this, it needs to be
mentioned that, all these economies which are facing such problems tend to share certain
common characteristics as well as features which tends to lead to this overall limitation. The
essay presented the overall concept of the Inequality and Development and also laid down the
different reasons why the inequality and development forms the constraints to the welfare of the
people as present. This was followed by the discussion on the salient features of the economy
with high levels of inequality and limited growth. The last section of the essay presents a
recommendation on the different policies which may be adopted by the different countries to
ensure success.

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