University of Khartoum

Growth and Inequality in Sudan

Growth and Inequality in Sudan

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Title: Growth and Inequality in Sudan
Author: Hisham Mohamed Hassan, Ali
Abstract: This dissertation analyzes the basic factors driving growth, and the impact of income inequality on growth for Sudan over the period 1956 to 2003, in addition to testing the validity of the Kuznets curve, according to which income inequality rises with per capita income to a certain level and declines thereafter. It also examines the relationship among growth, income distribution, government spending, and poverty reduction. The results of the neoclassical model suggest a significant impact of macro policy settings on output per capita over time. The regression results suggest that the variability of inflation has an important influence on growth. Results suggest that the link between inequality and growth is robust with negative and significant effect of inequality on growth in Sudan. The fertilityeducation issue is the main explanatory factor of the link. We find a non-linear relationship between inequality, redistribution and growth, accordingly, Sudan would be considered unequal because of the weak redistributive channels and adopted policies The adopted approach seems the negative effect of redistribution on growth instead of positive effect. There is not a clear relationship between inequality and redistribution and between redistribution and growth. There is evidence to support the capital market theory. Political instability model is not completely supported by data, since Sudan with high political instability seem is positively and significantly linked to growth. It seems that the human capital-fertility approach better fits the evidence provided by the Sudan data. For the 1956-2003, the average Kuznets Elasticity is 0.46 and the inequality increased at an annual rate of 0.89 per cent. The elasticity of the poverty head count ratio with respect to the inequality coefficient also fluctuated with the fluctuations in the inequality coefficient. The average elasticity for the 1956-2003, is 0.44, which is lower that the average absolute value of the elasticity of the poverty head count ratio with respect to per capita private consumption of 0.78. An increase in the inequality coefficient of one percent would have resulted in an increase in the poverty head count ratio by about 0.78 percent, holding per capita private consumption constant. The result shows that the growth was not pro-poor in Sudan during 1988-90, 1990-92 and 1992-2003. However, growth became pro- poor during 1956-67 and 1968-79, when the PEG were higher than the actual growth rates For the 1956 -2003, the average welfare index is 41% indicating that the Sudan loss on average about 59% below the level it would be if its per capita income were equally distributed with standard deviation 0.052. The ECT in the inequality and poverty equations is found statistically significant at 5 and 1 per cent level, from the F-bounds test of cointegration. This implies that in the long run the causality runs from inequality, poverty to growth, to poverty and that change in inequality are a function of disequilibrium in the cointegrating relationship.
URI: http://khartoumspace.uofk.edu/handle/123456789/12707
Date: 2015-06-15


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