Inequality and economic growth: Trickle‐down effect revisited

Abstract

The purpose of this study is to investigate the validity of trickle‐down effect by using unbalanced panel data analysis for 65 countries in the period of 1995–2011. The estimation results point out that an increase in the incomes of the rich raises the incomes of the poor and vice versa. Nevertheless, it can clearly be seen that the contribution of the income transfer of the poor to the rich is more dominant than vice versa. Therefore, the invalidity of trickle‐down effect can be stated for 65 countries.

Institutions and inequality interplay shapes the impact of economic growth on biodiversity loss

“…Although most of the empirical literature using panel data do support a negative relationship between economic growth and inequality (Alesina and Rodrik 1994, Easterly 2001, Panizza 2002, Knowles 2005, there are suggestions of why this may be the result of an omitted variable bias or country-specific variables (Forbes 2000). Furthermore, an oft-quoted theoretical argument that economic growth will improve the overall income distribution by the "trickle-down effect" (Aghion and Bolton 1997), where more income is available to the poor as capital accumulation is achieved by economic growth, is also much disputed in recent years (Stiglitz 2015, Akinci 2018. For example, in some cases the growth-inequality relationship changes from negative to positive for developing and developed countries, respectively (Barro 2000), while others report complex and nonlinear changes (Banerjee and Duflo 2003, https://www.ecologyandsociety.org/vol25/iss4/art39/ Huang et al 2015).…”

A Dynamic Investment Development Strategy on How To Accelerate The Economic Growth

“…This concept emphasizes large-scale investments to stimulate investment with levels that are below it to grow around it. The main idea the trickledown effect is the accumulation of welfare generated from high-income people to low-income people because of the increased transfer of the two groups (Aghion, Akinci) [6,7]. This causes the economic aspects through the investment mechanism to trickle down and increase investment to the level below it as shown in Figure 2.…”

A Dynamic Strategical Plan to Strengthen Food Security

“…This concept emphasizes a large-scale investment to stimulate investment by the existing level underneath to grow around it. The main ideas of the trickle-down effects are the accumulation of well-being resulting from high-income to the low income due to an increase in the transfer of these two groups [10,11]. Thus, it can be seen if the land earmarked for the development of sectors of agribusiness could stimulate the growth of the new industries and can be maximized for investment both domestic and foreign.…”