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Equity and economic growth, a theoretical and empirical study: MENA zone

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  • Dastjerdi, Rasul Bakhshi
  • Isfahani, Rahim Dalali

Abstract

In macroeconomic literature, it is widely held that persuasion of economic growth and more equitable distribution of income (wealth) is not possible at the same time. The basic reason put forward is that to aim for more equitable distribution will reduce total savings in short and medium terms by reducing the weighted average of propensities to save of the different strata of the society. Therefore, the main objective for countries in transitional period is to have a higher economic growth rather than a fairer distribution of income. Recent developments on economic growth studies from a longer perspective and with sustainability criterion has put above idea in real jeopardy. It is shown that by paying more attention to justifiable distribution especially among different generations will promote a higher genuine savings which results in a higher rate of steady economic growth. In this research we use dynamic optimization approach (optimal control) for studying the mechanics of this regularity and test the proposition for selected MENA zone countries and then compare with some developed countries. Our ultimate goal is suggesting a fair fiscal policy to have a high economic growth compatible with a fairer distribution of wealth and income. It seems that any attempt to provide a more equitable condition, will be eventually reached to a higher capital formation, higher saving and higher output per capita in MENA region compared with selected developed countries.

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  • Dastjerdi, Rasul Bakhshi & Isfahani, Rahim Dalali, 2011. "Equity and economic growth, a theoretical and empirical study: MENA zone," Economic Modelling, Elsevier, vol. 28(1-2), pages 694-700, January.
    • Handle: RePEc:eee:ecmode:v:28:y:2011:i:1-2:p:694-700
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    Cited by:

    1. Saari, M. Yusof & Dietzenbacher, Erik & Los, Bart, 2014. "Production interdependencies and poverty reduction across ethnic groups in Malaysia," Economic Modelling, Elsevier, vol. 42(C), pages 146-158.
    2. Milenkovic, Nemanja & Vukmirovic, Jovanka & Bulajic, Milica & Radojicic, Zoran, 2014. "A multivariate approach in measuring socio-economic development of MENA countries," Economic Modelling, Elsevier, vol. 38(C), pages 604-608.
    3. Awdeh Ali, 2018. "Financing for Development in the MENA Region," Review of Middle East Economics and Finance, De Gruyter, vol. 14(3), pages 1-14, December.

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