An analysis of income inequality between BRICS and G7 countries
Date
2018
Authors
Sookroo, Sashin
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Abstract
Studies on income inequality have largely focused on deriving Concept 3 inequality, focusing on global studies. This paper analyses Concept 1 inequality between BRICS and G7 countries and Concept 2 inequality between BRICS and G7 groups, from 1993-2003.
The paper used secondary data obtained from the World Bank databases and tracked year-on-year changes, over the 20 year period. The paper found that USA, Canada, the UK and Germany increased the most in terms of dollar value of GDP per capita. In terms of GDP percentage change, China, India, Russia and Brazil increased the most. The USA, Canada, Germany and the UK increased the most in terms of dollar value of GNI per capita and in percentage change in GNI per capita China, India, Russia and Brazil increased the most. In addition, the paper also found that there is a convergence of income that was observed between BRICS and G7 and even when China or China and India where excluded from the BRICS definition, Brazil, Russia and South Africa’s income per capita increased faster than G7’s income per capita; although G7’s real dollar value growth is larger than BRICS, BRICS excluding China and BRICS excluding China and India.
It was recommended that governments need to monitor changes in income inequality, understand drivers of income per capita and adopt approaches used by high income per capita growth countries. In addition, although a convergence is observed between BRICS and G7; more work needs to be done to reduce income inequality by governments, international regulatory bodies and policy makers. Further, economic modelling needs to be revisited to understand how income inequality has changed and will change in future between countries and/or groups of interest. Lastly, organisations with global interests must understand the benefits of increasing income in foreign operations and the impact on productivity and organisation value.
Description
MBA Thesis
Keywords
Income distribution. BRIC countries. Group of Seven countries.