Income Distribution and Economic Growth in LDC's Essay

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Income Distribution and Economic Growth in LDC's INTRODUCTION In recent years, one of the major concerns of economic development is the study of poverty, the income distribution and growth in the less developed countries (LDC’s) or Third World countries. Economists from all over the world have been doing researches and studies on how to induce a growth in those underdeveloped countries. However, countries differentiate in historical backgrounds, cultural believes and natural resources. As a result, the government would implement different strategies to attain a much fairer distribution of income among the society. The relationship between the income distribution and growth in the LDC’s is a significant factor that would affect…show more content…
The major concern of the policies would be the approach to provide human basic needs (HBN) for each and every one of the people in the country. In nearly all of the LDC’s, majority of the people are living under absolute poverty. This means that they are not able to provide a standard level of living for themselves. Different policies to improve the income inequality and also procure an economic growth include land reform, redistribution of saving and investment, education for all, progressive taxation, public expenditures from tax revenues and birth control. Some people think that there existed a trade-off between growth and equity. They think that distributing income too equally would undermine incentives and thus lower everyone's income. They believed that the rich needed special encouragement to save and invest more in order to cause a growth in the economy. Recent evidence suggests that this conventional wisdom is wrong. Many economies in Asia - Hong Kong, Indonesia, Malaysia, the Republic of Korea, Singapore, Taiwan (province of China) and Thailand - have had both rapid growth and relatively low inequality. “Between 1960 and 1993 the East Asian economies,
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