The relationship between economic growth and income inequality in Asian countries; A panel quantile regression study

Abstract

© 2018, Institute of Advanced Scientific Research, Inc. All rights reserved. Economic growth and income inequality nexus in Asian countries was investigated using panel quantile regression model for analysis with reference to overall national social and economic development plans of these countries on the parts of policies to promote growth and overcome inequality problem. The policy review revealed slightly different emphasis across countries in the ASEAN community. Indonesia, Malaysia, and Singapore have placed priority on liberal trade and foreign investment, and strengthening competiveness with cutting-edge innovation and technology. The Philippines and Thailand have strived for sustainable economic growth, and stability in financial sector and fiscal system. Meanwhile, Cambodia and Vietnam have stressed the openness of the country, export oriented industrial, services, and agricultural development, the escape from less developed country status, and the reduction of poverty and income inequality. The overall analysis found the positive relationship, more growth-more inequality and vice versa, to exist only when the economic growth and the income inequality are at low or median levels. The policy recommendation is thus to encourage higher rate of economic growth.