Posted on June 28, 2012 by iMFdirect
By David Coady and Sanjeev Gupta
The issue of rising income inequality is now at the forefront of public debate. There is growing concern as to the economic and social consequences of the steady, and often sharp, increase in the share of income captured by higher income groups.
While much of the discussion focuses on the factors driving the rise in inequality—including globalization, labor market reforms, and technological changes that favor higher-skilled workers—a more pressing issue is what can be done about it.
In our recent study we find that public spending and taxation policies have had, and are likely to continue to have, a crucial impact on income inequality in both advanced and developing economies.
In advanced economies, this is especially important given that the ongoing fiscal adjustment needs to be continued for many years to reduce public debt to sustainable levels. But it is equally important in developing economies where inequality is relatively high.
Filed under: Advanced Economies, Civil Society, Economic research, Emerging Markets, Employment, Globalization, growth, Inequality, Politics, Public debt | Tagged: 99%, automatic stabilizers, David Coady, education, fiscal policy, Globalization, health, higher-skilled workers, iMFdirect blog, inequality, Ireland, labor market reforms, loopholes, OECD, poverty, property, redistribution, Sanjeev Gupta, Spain, tax, technological change, top 1%, unemployment benefits, United States, wealth | 10 Comments »
Posted on May 24, 2012 by iMFdirect
By Roberto Guimarães and Laura Papi
The extent of the recent slowdown in India’s growth rate has surprised most India watchers even in the face of ongoing international financial market volatility, high and volatile oil prices, and the uneven global recovery.
GDP growth fell throughout 2011, from a high of 7.8 percent at the beginning of the year to 6.1 percent in the quarter ending in December. The slowdown in the economy has affected the industrial sector particularly hard and has extended to 2012 as shown by the 3.5 percent contraction (y/y) in March industrial production. For 2012/13, we at the IMF project that GDP growth is likely to be about 7 percent.
While India has been affected by the worldwide slowdown, many observers have started to question the inner strength of the Indian growth story.
By international standards 7 percent growth is still very robust, but it sometimes feels like underachievement for a country that was growing at more than 9 percent just a few years ago.
Filed under: Asia, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, Finance, Globalization, growth, Inequality, Investment, Politics, Public debt | Tagged: bonds, bottlenecks, coal, electricity, FDI, iMFdirect blog, India, land, Laura Papi, liberalization, mining, power, RBI, reform, Reserve Bank of India, Roberto Guimarães, silver lining, subsidies, tax | 6 Comments »
Posted on November 16, 2011 by iMFdirect
By Masood Ahmed
(Version in عربي)
Unemployment rates in the Middle East and North Africa have remained above 10 percent over the past decade, the highest in the world. For the young the rates are even more daunting, at a persistent 25 percent: one in four of the region’s young people are without work. Many people who cannot find jobs in the formal economy are relegated to working in the informal sector, for lower wages and without the protections and opportunities that workers enjoy in the formal economy.
The informal economy is large and pervasive—and, often, ignored; however, the experience of those who work in the informal sector came under the media spotlight when Tunisian street vendor Mohamed Bouazizi set himself on fire that fateful day in December last year, sparking the Arab Spring protests.
Estimates indicate that the informal economy in the oil-importing countries of the Middle East and North Africa is substantially larger than in several Asian and Latin American countries. In Morocco, for example, the informal economy is estimated at 44 percent of officially measured GDP. In most other oil importers, it is estimated at close to one-third.
Filed under: Economic research, Employment, growth, Inequality, Middle East | Tagged: Arab Spring, Bouazizi, Egypt, employment, governance, inclusive growth, informal sector, jobs, Labor, Lebanon, Morocco, protest, regulation, Syria, tax, Tunisia, workers | 10 Comments »