Macro-Structural Policies and Income Inequality in Low-Income Developing Countries

Staff Discussion Notes, January 26, 2017

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Macro-Structural Policies and Income Inequality in Low-Income Developing Countries

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Bibliographic details

• Authors: Stefania Fabrizio, Davide Furceri, Rodrigo Garcia-Verdu, Grace B Li, Sandra Lizarazo, Marina Mendes Tavares, Futoshi Narita
• Published: January 26, 2017
• Series: Staff Discussion Notes
• DOI: https://doi.org/10.5089/9781475566222.006

Overview and context

• Authors: Stefania Fabrizio, Davide Furceri, Rodrigo Garcia-Verdu, Grace B Li, Sandra Valentina Lizarazo, Marina Mendes Tavares, Futoshi Narita
• Publication date: January 26, 2017
• Series: Staff Discussion Notes No. 2017/001, Issue 001, Volume 2017, Pages: 42
• DOI: https://doi.org/10.5089/9781475566222.006
• ISBN: 9781475566222
• ISSN: 2617-6750

Key findings

• Despite sustained economic growth and rapid poverty reductions, income inequality remains stubbornly high in many low-income developing countries.
• High levels of inequality can impair the sustainability of growth and macroeconomic stability, and can limit countries’ ability to reach the Sustainable Development Goals.
• Macro-structural policies aimed at raising growth payoffs in low-income developing countries can have important distributional consequences.
• The impact of such policies on income inequality depends on both:
  • the design of the reforms, and
  • country-specific economic characteristics.
• There is no one-size-fits-all recipe for ensuring that growth-promoting macro-structural reforms are distributionally neutral or progressive.

Analytical approach

• The note uses empirical and modeling techniques to assess distributional consequences of macro-structural policies in low-income developing countries.

Policy implications and recommendations

• Governments can address adverse distributional consequences of pro-growth reforms by designing reform packages that make pro-growth policies also more inclusive.
• Policy design should account for country-specific economic characteristics to mitigate negative distributional outcomes.

Subjects and keywords (as listed in the source)

• Subjects: Agricultural sector, Economic sectors, Income, Income distribution, Income inequality, National accounts, Taxes, Value-added tax
• Keywords: Agricultural sector, agriculture, Caribbean, cash transfer program, cost of capital, financial inclusion, financial sector reform, growth, higher-productivity sector, Income, Income distribution, income fluctuation, Income inequality, inequality in low-income developing countries, infrastructure investment, macro-structural policies, productivity, productivity gap, rate, resource mobilization, revenue, SDN, Value-added tax

Staff Discussion Note: Macro-Structural Policies and Income Inequality in Low-Income Developing Countries (Staff Discussion Notes 2017, 001).

Content in this bundle

• MACRO-STRUCTURAL POLICIES AND INCOME INEQUALITY IN LOW-INCOME DEVELOPING COUNTRIES
  • MACRO-STRUCTURAL POLICIES AND INCOME INEQUALITY IN LOW-INCOME DEVELOPING COUNTRIES (Markdown version)
  • MACRO-STRUCTURAL POLICIES AND INCOME INEQUALITY IN LOW-INCOME DEVELOPING COUNTRIES (PDF)