Does Inequality Necessarily Go with Economic Growth (Within a Country)

CCGL9025 Essay

Name: Yuan Shuailin Alison

Student UID: 3035232547

Topic: Does inequality necessarily go with economic growth (within a country)?

In history textbooks in mainland China, the industry revolution period led by English Empire is often depicted as the widening gap between the wealthy capitalist and poor living conditions of factory workers, as well as the gap between development of the Western and stagnation of victims in colonies, like Latin America and Africa. Here rises an interesting question: does inequality necessarily go with the economic growth? As Marx’s labor theories of value and exploitation argue that the inequality is inherent in the wages system and in the process of production, there is definitely a relationship between the two factors. In order to simplify the study of this relationship, the essay will only focus on the process within a country, leaving the global level untouched. The essay will argue that inequality is rather a complicated result of many walks of society, especially under the combined influence of economy and policies. In terms of economy, the trend of inequality rate usually depends on the distinctive economic structure and the phase of growth of a country. When the society is transforming from an agricultural to industrial society, the inequality will often drop. While the transformation is from manufacturing industry to service and high-tech industry, the inequality rate will often increase. Finally, the essay will give possible suggestions for promoting equality while maintaining growth.

1. Methodology

The economic growth is roughly measured by GDP of each country, and GDP is segmented by factor income approach instead of national spending approach in order to examine the proportion that every section of the society contributed to the economic growth.

Inequality is roughly measured by Gini coefficient and graph of normal distribution of income (household as unit). Since the income may be from...