Income Inequality in Emerging Market Economies: A Multi-Country Study of Brazil, India and South Africa

Abstract

Inequality refers to the extent to which income is evenly distributed across a population (IMF, 2022). The World Inequality Report (WIR, 2022) reveals the latest trends in global income inequality. It shows that the richest 10% of the global population currently earns 52% of global income, while the poorest half of the population takes 8.5% of it. In emerging market economies, indications are that income inequality is rising; sometimes accompanied by accelerating economic growth. Reports reveal that Brazil’s six richest individuals command the same wealth associated with the poorest 50% of the population, or about 100 million people. The World Inequality Report (2021) reveals India as a poor and unequal country, with the bottom half of the population earning only 13% of the nation’s income, while the top 10% controls 57% by 2021. In South Africa, the IMF (2020) acknowledges that the nation’s inequality has remained at high levels, perhaps the highest in the world. This is characterized by a highly skewed income distribution pattern, with the top 20% of the population controlling 68% of national income. These developments hold grave implications for emerging markets, particularly their ability to meet the 2030 Sustainable Development Goals. The main objective of this paper is to explore income inequality in emerging market economies, with a multi-country study of Brazil, India and South Africa. The methodological approach to the study involves both qualitative and quantitative analytical techniques. It relies on secondary data in publications from various sources, complemented by interviews of stakeholders in the study areas. Findings reveal the income inequality is undermining economic growth and development in emerging markets, fueling conflicts and triggering migration in some countries. The paper presents recommendations, underpinned by progressive taxation, social safety nets, gender equality, development of social services, and leveraging economic and financial incentives for labour-intensive industries.