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Income distribution in the BRICS

If you have any doubts the graph above confirms the obvious. Income distribution is terrible in Africa and Latin America, and slightly better in ex-communist (China too is ex, isn't it?) and Asian countries. Mind you I expected China to be better than Russia.

Comments

  1. In Brazil, ideas of salary repression to create savings and thus investment were strong contributors for the income concentration, and of course other historical reasons

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    1. Wage stagnation in reais (in dollars with real appreciation they increased) are there as an anchor to price stability. No relation to savings, which are a residual flow of income. Investment has been low following the accelerator.

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    2. I see. I am talking more of the Delfim Netto or Simonsen era's, I read that they had an "wealth distribution not needed to develop, what is needed is low salaries to generate high accumulation of savings=investment", is that incorrect?

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    3. Yep, indexation of wages below inflation was the rule. But again what allowed growth according to Tavares and Serra (Além da estagnação) was that worsening incomedistribution still allowed for higher consumption of the upper strands of the middle class.

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  2. is that recent data? it would be a nice idea to show some graphs about the progression of each country. it seems to me that Brazil has had some improvement, even if it's still bad.

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    1. Oi Pedro (vai em inges mesmo, que nem pro Alex acima). Yes this are recent and from World Bank, and yes income distribution has improved somewhat in Brazil particularly in Lula's second period, as a result of minimum wage increases and higher transfers. Note that even functional income distribution improved too. And yes we need to improve way more.

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  3. India doing slightly better than China is interesting. Considering what China had achieved post revolution, there must have been a sharp worsening in inequality in China since late 1970s (under Deng Xiaoping and his successors), what started in India post 1990 reforms.

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    1. Jamie Galbraith and his UTIP project at the University of Texas have done some work on it (http://utip.gov.utexas.edu/papers/utip_20rv.pdf). Inter-provincial inequality in China apparently increased quite a bit.

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    2. Thanks Matias for sharing the link. Will have a look.

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  4. Hi Matias, Can you please share the link for Tavares and Serra's work. In the Developing country/Indian context where there is trade deficit (India and Brazil)or a small surplus and government's role is limited, some theoretical work has been done to show the possibility of growth in a scenario when the income distribution is worsening. For example, Prabhat Patnaik's work here http://www.macroscan.com/anl/apr07/pdf/Indian_Economy.pdf

    Growth in Patnaik also rests on consumption by the richer section of the population but his conclusion is that such growth may be highly unstable. In an unpublished, but beautiful, work, someone has shown under what conditions such growth can be stable. He also shows how such growth can be predatory - characterised by high joblessness.

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    1. I'm sorry to say that as far as I know the paper by Tavares and Serra is only in Portuguese or Spanish. Link for the Spanish one here if it is useful http://cronopio.flacso.cl/fondo/pub/publicos/1968/libro/021621.pdf . Patnaik's work seems to be along the same lines indeed.

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