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Do technological innovation and financial development affect inequality? Evidence from BRICS countries

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  • Mduduzi Biyase

    (College of Business and Economics, School of Economics, University of Johannesburg)

  • Talent Zwane

    (College of Business and Economics, School of Economics, University of Johannesburg)

  • Precious Mncayi

    (North West University)

  • Mokgadi Maleka

    (College of Business and Economics, School of Economics, University of Johannesburg)

Abstract

While technological innovation and financial development are broadly credited as important drivers of economic growth of developed nations, its impact on inequality (especially in emerging economies) remains understudied. This study employs panel Dynamic Ordinary Least Squares (PDOLS) and panel Fully Modified Ordinary Least Squares (PFMOLS) with annual data sourced from the Standardized World Income Inequality Database, IMF and World Bank (1990-2017) to investigate the impact of technological innovation and financial development on income inequality in BRICS countries. The results suggest that technological innovation increases income inequality in the BRICS nations, while financial development has income reducing effect on inequality. Our results are robust, using alternative estimation with various sub-indicators of financial development (such as financial markets, financial institution), including other measures proxied by access to credit provided by commercial bank.

Suggested Citation

  • Mduduzi Biyase & Talent Zwane & Precious Mncayi & Mokgadi Maleka, 2023. "Do technological innovation and financial development affect inequality? Evidence from BRICS countries," Economics Working Papers edwrg-01-2023, College of Business and Economics, University of Johannesburg, South Africa, revised 2023.
    • Handle: RePEc:ady:wpaper:edwrg-01-2023
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    References listed on IDEAS

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    Keywords

    BRICS; PFMOLS; PDOLS; technological innovation; inequality.;
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