Title: Socio-economic inequality and economic growth in BRICS countries: relationships and policy options
Authors: Olawumi D. Awolusi; Josue Mbonigaba
Addresses: School of Accounting, Economics and Finance, University of KwaZulu-Natal, KwaZulu-Natal, Durban, South Africa ' School of Accounting, Economics and Finance, University of KwaZulu-Natal, KwaZulu-Natal, Durban, South Africa
Abstract: This paper assesses the influence of economic growth on socio-economic inequality in the Brazil, Russia, India, China, and South Africa (BRICS) countries, using a yearly dataset from 1980 to 2017. The long-run equilibrium relationships were established via Pesaran et al.'s autoregressive distributed lag (ARDL) cointegration technique, as well as, Toda and Yamamoto's granger no-causality approach in a two-variable vector autoregression model. The outcome of the estimated causality test detected both unidirectionally and bidirectionally causal effects in the short-run for all the variables. Our study, therefore, concluded that the long-run equilibrium relationships between economic growth and socio-economic inequalities in the BRICS countries vary from one country to another, but were largely insignificant in the models of Russia and China during the study period. This is tacit support for the Kuznets hypothesis in both China and Russia. All robustness checks validated our main findings. Varied policy options and recommendations are highlighted.
Keywords: socio-economic inequality; economic growth; autoregressive distributed lag cointegration test; Toda-Yamamoto causality test; BRICS countries.
International Journal of Services, Economics and Management, 2020 Vol.11 No.4, pp.390 - 429
Received: 25 Dec 2019
Accepted: 21 Sep 2020
Published online: 14 Dec 2020 *