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Does abundant natural resources amplify the negative impact of income inequality on economic growth?

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  • Anyanwu, Ugochukwu Michael
  • Anyanwu, Amarachukwu Anthony
  • Cieślik, Andrzej

Abstract

Prevailing research suggest that inequality has a negative impact on economic growth. We hypothesize that countries that have abundant natural resources stand to suffer more from income inequality. Using the system generalized method of moments (GMM) dynamic panel estimation method and data set for the period 1988–2012, we compare the relationship between inequality and economic growth in resource and non-resource abundant countries. Our results confirm that the negative impact of income inequality on economic growth is amplified for countries that are endowed with abundant natural resources. Therefore, we propose that reducing income inequality could mitigate the detrimental impact of resource abundance on economic growth.

Suggested Citation

  • Anyanwu, Ugochukwu Michael & Anyanwu, Amarachukwu Anthony & Cieślik, Andrzej, 2021. "Does abundant natural resources amplify the negative impact of income inequality on economic growth?," Resources Policy, Elsevier, vol. 74(C).
    • Handle: RePEc:eee:jrpoli:v:74:y:2021:i:c:s0301420721002403
    DOI: 10.1016/j.resourpol.2021.102229
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    More about this item

    Keywords

    Abundant natural resources; Income inequality; Economic growth;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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