Brazil and China: Two Routes of Economic Development?

Abstract

We look at two emerging economies, Brazil and China, and propose an evaluation of their recent development in terms of growth performance and the evolution of income inequality. Our analysis, therefore, is related to the literature on their recent vast growth and also to the much debated Kuznets curve and theory. However, we claim that neither the growth nor the Kuznets approach capture recent relevant phenomena characterizing such countries' dynamics: namely, the presence of at least two distinct growth models. Cointegration analysis and empirical evidence seem to corroborate our interpretation. They also offer some further insights. We surmise that while contributing to press for a further re-examination of convergence in the light of the issue of income distribution, such findings have interpretative relevance and policy implications for other less developed countries

Linearidad y causalidad en la relación dinámica entre la desigualdad de ingresos y el crecimiento económico: evidencia de un país latinoamericano de altos ingresos

“…For the Uruguayan case, the results showed a negative linear relationship between income distribution and economic growth in the long-run. Similar long-run relationships are found in Mexico (Risso et al, 2013), Brazil (Policardo et al, 2015) and Portugal (Andrade et al, 2014). However, differences across studies are found in relation to the causality between inequality and economic growth.…”

“…Causality is found to go from economic growth to inequality in the Uruguayan and Mexican cases. Conversely, for Brazil and Portugal, inequality causes economic growth (Policardo et al, 2015;and Andrade et al, 2014;respectively). A positive relationship between inequality and growth for the pre and post reforms periods is found in China, and causality goes from inequality to growth in the pre-reform period (Risso and Sánchez-Carrera, 2012).…”

“…Also, the study points out that causality goes from inequality to growth in the pre-reform period, while for the post-reform period no directional causality is found. Also, Policardo et al (2015) analyze the long-run relationship for Brazil and China separately, for the period 1980 to 2009, through cointegration analysis. In line with Risso and Sánchez-Carrera (2012), a positive relationship between inequality and economic growth is found for China.…”

“…By exploring the cases of Belgium, Finland and US, the authors stress that different inequality-growth models hold for different countries, which may in turn explain the mixed effects found in previous cross-section and panel studies. Few country case studies tackling the long-run relationship between income inequality and economic growth through cointegration analysis are provided in Risso et al (2013) for the Mexican case, Risso and Sánchez Carrera (2012) for China; Policardo et al, (2015) addressing the cases of Brazil and China, and Andrade et al (2014) for the Portuguese case.…”

Desigualdad y crecimiento económico: un análisis dinámico

“…En esta misma línea, se encuentran algunos resultados de estudios que realizan su análisis sobre un sólo país, en los casos de México y Uruguay por ejemplo, se encuentra relación negativa entre las variables (Risso, Punzo y Sánches Carrera, 2013;Brida, Lanzilotta y Méndez, 2017). Otros estudios en cambio, encuentran que para este tipo de países la relación no es significativa (Perroti, 1996;Barro, 2000), mientras que algunos trabajos concluyen que la relación tiene forma de U o U invertida (Bengoa y Robles, 2005;Policardo, Punzo y Sánchez Carrera, 2016). Para los países desarrollados o de alto ingreso, son varios los trabajos que encuentran una relación positiva entre crecimiento y desigualdad (Forbes 2000;Barro, 2000;Voitchovsky, 2005;Bengoa y Robles, 2005;Castelló, 2010).…”