Discuss the Impact of Inequality on Development Essay Example
Discuss the Impact of Inequality on Development Essay Example

Discuss the Impact of Inequality on Development Essay Example

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(2016) opines that inequality has been with human race since time immemorial. Furthermore, Gajardo contends that the differences in wealth, the prospects to earn a living, and human rights between people and nations are older than civilization itself. Indeed, there is no clear evidence that high inequality will decline anytime in the foreseeable future (Bigsten, 2014; Milanovic, 2003).

Despite the fact that inequality is a major problem in the world, there are no acceptable explanations and well grounded reasons for its persistence. This is because it is hard to point out clear motives behind inequality in all human societies though there has not been a conscious move towards a perfectly equal distribution of resources.

Despite the fact that in most of today’s democracies, we find several attempts at redistribution and a strong interest in creating universal opportunities for everyone, there is no significant achievement in this direction (Gajardo, 2016). Globally, literature discloses that besides Latin America, Africa leads the in the differences in wealth, and prospects (Ravallion & Chen, 2012).

The persistence of inequality run counter to development objective which seeks to broaden people’s opportunity to create and reconstruct themselves, and their circumstances to realise higher levels of civilization in accordance with their own choices and values (Claude Ake, 1996). Poverty and inequality in Africa are caused by domestic and external factors and as well as the political economy which effectively weakened the process of development in the continent.

The purpose of this paper is to examine how inequality affects the attainment of higher level of development. The paper is divided into three sections. Following on this, the concepts of development and inequality are defined and ex


plained to set the tone for the discussion of the subject of interest. The next section discusses the different manifestation of inequality and how they affect the achievement of raising the standards of living of people. The final section, presents the conclusions and the critical observations.

Development and Inequality

Singh (2009) defines development as desirable change. In a much broader sense, Green and Zinder (2013) conceive development as the ability of individuals to maximize their preferences and capacities, whatever they are. In underscoring the need to give opportunity to people to maximize their preferences and capacities, Singh (2009) points out that development is natural since all forms of life on planet earth have an inherent urge to survive and develop.

As a consequence, development implies the improvement in health and nutrition, education, environmentally safe living conditions, and reduction in gender and income inequalities between people (Fernando, 2008). Inequality, on the other hand, can be distinguished into two. The UN-Habitat (2008a) distinguished between traditional and modern inequalities.

Traditional inequalities are the differences in human capabilities, and opportunities, participation in political life, consumption, and income, which lead to disparities in living standards and access to resources, basic services and utilities (UN-HABITAT, 2008a). Conversely, modern inequality includes disparities in access to communication technologies and high-value skills (UN-Habitat, 2008a).

Broadly, inequality can be categorised into inequality of Outcomes, and inequality of opportunities. Inequalityof outcome reflects the differences in income distribution attributable to the economic, demographic and social process in a society (Lefranc, Pistolesi & Trannoy, 2008). Conversely,

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inequality of opportunities is caused by the factors that limit the ability of the individual to cease existing prospects.

The limiting factors include gender, ethnicity, location of birth, or family background; these factors are naturally outside the ability of the individual to control. In this event, inequality of outcomes emanates from differentiation in opportunities and individual’s efforts and talent (Dabla-Norris, Kochhar, Ricka, Suphaphiphat, & Tsounta, 2015). In the section that ensues, the discussion will centre on three main areas of inequality; gender inequality, spatial inequality and income inequality and how these areas affect development.

The impact of Inequality on Development

Inequality manifest in different and several forms and the consequences on development too vary. For instance inequality manifest in differences in gender. Gender inequality has been variously defined. For instance, the World Band defines gender inequality as the difference in treatment of people owing to gender (World Bank, 2001).

Similarly, Ferrant (2011) define gender inequality with reference to the treatment given to an individual because of gender. Ferrant adds that gender inequality involves excluding or restricting opportunities that are available to people based on gender consideration. Ferrant (2011) explains that gender is a multidimensional concept which may vary from one country to another depending on development attained, social and cultural characteristics, and social institutions.

Gender inequality has implication for development. Ferrant (2011) explains that gender inequality creates distortion all spheres of living thereby hindering development. Ferrent contends that gender occupies an important role in the human and physical assets are generated, as well as technological progress and the efficiency.

Therefore, excluding a segment of the population through discrimination, some countries limit their ability to accumulate physical and human capitals and their ability to innovate (Klasen, 2002). Klasen explains that gender discrimination leads to the exclusion of women from the accumulation of physical and human capitals, even if they are able than men (Klasen (2002). It can be inferred that the gender discrimination exclude women from the productive sectors of the economy. This therefore, limits the ability of the country to expand choices on goods, and services.

Similarly, the World Bank (2001) posits that gender inequalities impose costs on productivity, efficiency, and economic progress. The World Band explicates that gender inequality hinders the accumulation of human capital to support the home and labor market requirement.

Furthermore, excluding women from access to resources, public services, or productive activities, weakens the capacity of the economy to grow and therefore, living standards will either stagnate or deteriorate (World Bank, 2001). Contributing to the debate, Solt (2008) explicates that gender inequality limits the level of political engagement of women. Solt further explains that greater gender inequality increases the relative power of men as compared to women. Consequently, gender inequality leads to low level of women’s political engagement.

High inequality as a result of gender suggests that redistribution of power is highly doubtful. It stands to reason that higher levels of gender inequality yield greater disparity in political involvement. On the other hand, low gender inequality, it may lead to greater and higher political engagement of women.

Another important dimension of inequality that affects development is spatial differences in resources and investment. Lall and Chakravorty (2004)

define spatial inequality as the differentiation in the levels of geographical entities base on certian variable of interest. Similarly, spatial inequality refers to the uneven distribution of economic and social variables of human wellbeing and these these differences сan be within or among countries, cities, rural and urban areas, and regions (Aryeetey Owusu & Mensah, 2009).

It important, therefore, to state that in the discrepancies in the spatial distribution of services, facilities and infrastructure have implications for the development of the areas concern (Michael & Clifford, 2015).  It is important to note that unequal spatial distribution of resources and investment could be as a result of the natural occurrence of resources or a deliberate policy choice.

Deliberate government policies and investment choices create inequality. The decision of to invest in either rural or urban areas has implication for development. For example, in a situation where there is a deliberate government’s policy to concentrate investment on infrastructural facilities and services in urban areas, it is likely that the investment will ultimately lead to improved access to social services, and economic opportunities in the urban areas (Michael & Clifford, 2015).

However, low investment in the rural areas will result in inequality in the distribution of social and economic infrastructure and this will impede the development of rural areas (Michael & Clifford, 2015). In summary, spatial inequality brought about by deliberate investment policy has the tendency to limit the ability of the rural people to achieve increase standard of living. Also, such investment decisions inhibit the possibility of the enhancing the access to basic services and infrastructure in rural areas.

In Ghana, investment in infrastructure has largely concentrated in the southern part of Ghana to the detriment of the northern part of the country. Disparities in investment in infrastructure and service provisions in Ghana started during the colonial period when investment was concentrated in areas blessed with resources that could be exploited to feed metropolitan industries.

This trend has continued even after independence and that led to the huge disparity in development between the northern part and the southern part of the country. Moreover, the difference in natural resource endowment creates inequality in the level of development attained by different regions within countries and between countries. In furtherance of this, Kim (2008) contends that difference in the exposure to international trade could bring about inequality.

Kim explicates that regions and cities that have natural resources for exports or natural advantages such as proximity to rivers, coasts, and transportation networks are likely to benefit from external trade whereas landlocked countries are more likely not to benefit from the advantages of international trade (Kim, 2008). However, inequalities resulting from natural factors such as natural resource endowments are largely fixed and therefore, it is not easy to surmount using deliberate policy (Michael & Clifford, 2015).

For instance, differences in natural resource endowment in Ghana have created imbalances in development attained in southern and northern parts of the country. Whiles the southern part of the country is endowed with natural resources such as favourable climate, fertile soil, economic trees among others, with which inhabitants leverage to develop, the northern part of the country is

less endowed with natural resources.

The northern part of the country is characterized by harsh climate conditions, poor soils, absence of navigable rivers and others. This situation places a constraint on the development the north relative to the south. It can be concluded from the discussion that the presence of natural resource endowment can facilitate development while their absence retards the possibility of improving the standard of living of the people in such areas.

Income inequality manifest in the unequal distribution of income. Income inequality is measured using Gini coefficient which is between 0 and 1. In a situation where the Gini coefficient is 0, it implies that everybody has the same income. On the other hand, a Gini coefficient of 1

implies one person control all the income (Dabla-Norris et al., 2015). A study conducted by Dabla et al. (2015) reveals an inverse relationship between the share income of the top 20 percent and economic growth of the countries studied. The study further reveals that a 1 percent increase in the income share of the top 20 percent correspond with 0.08 percent.

On the other hand, a similar increase in the income share of the bottom 20 percent leads to 0.38 percent higher growth. Similarly, Ostry, Berg, and Tsangarides (2014) report income inequality and economic expansion are inversely related due to the fact that income inequality negatively affects the capacity of the low income  groups to produce and consume.

Literature discloses that, countries with higher income inequality, low-income households are unable to access quality health services and good education and consequently, the ability of the poor households to accumulate human capital is affected.

This, therefore, leads to stagnation in the overall growth of the national economy or deterioration of the gains that have already been chalked (Galor & Moav 2004). Stiglitz (2012) opines that underinvestment in education as a result of low incomes can cripple chances of poor children attending high-quality schools. This can potentially limit their chances of attaining secondary and or tertiary education.

The cumulative effect of low investment in education and low level of education attained by poor households will tend to result in lower labour productivity which will subsequently affect the overall growth of the national economy (Stiglitz 2012). In many developing countries, poverty reduction remains a top priority in policy agenda for many years. However, income

Inequality tends to hamper poverty reduction efforts (Dabla-Norris et al., 2015). As discussed earlier in the paper, poor growth as a result of the inability of low-income households to participate in the economic space implies that the policy effprts that to reduce or eliminate poverty are likely to fail due to the low economic growth (Ravallion 2004).

This is because when the economy does not expand, it will not be able to generate employment avenues and direct jobs for the people and therefore people will not be able to leap out of the poverty trap. Dabla-Norris et al. (2015) add that poverty induced policies tend to favour the rich than the those within the low-income bracket because low-income households and individuals are unable to take advantage of the benefits poverty induced policies engendered thus, making the poverty

reduction measures inefficient.

Conclusion and Critical

In summary, the discussion has brought to the fore the fact development seeks to widen opportunities and choice for the people concern while inequality limits the capacity of the country or individuals to participate in the income generating activities. It also came to light that inequality is captured in the broader context of outcomes and opportunities.

Inequality of outcome centres on the factors that result in differences in income distribution while inequality of opportunities refers the inability of the individual to take advantage of existing opportunities as a result of factors that beyond the control of the individual. Furthermore, the discussion has shed light on the fact that inequality restricts one segment of the population [women] from supporting national and household labour requirement through gender discrimination.

Moreover, difference in investment in social and economic infrastructure as well as unequal provision of services adversely affects the possibility of raising the standard of living of the people. What is more, inequality in natural resource endowment and income inequality negatively affect development.

In this event, policies that are geared towards development should also either covertly or overtly address issues relating to the various dimensions of inequality. It can be said that without conscious efforts and deliberate policy to address inequality, development policies are likely to suffer defeat.