Financial development disproportionately boosts incomes of the poorest quintile and reduces income inequality. About 40% of the long-run impact of financial development on the income growth of the poorest quintile is the result of reductions in income inequality, while 60% is due to the impact of financial development on aggregate economic growth. Furthermore, financial development is associated with a drop in the fraction of the population living on less than $ 1 a day, a result which holds when conditioning on average growth. These findings emphasize the importance of the financial system for the poor.

Finance, inequality and the poor

Part I. Questions and Answers Section 1. Paths of Political Development: 1. Britain 2. Argentina 3. Singapore 4. South Africa, 5. The agenda Section 2. Our Argument: 1. Democracy vs. nondemocracy 2. Building blocks of our approach 3. Towards our basic story 4. Our theory of democratization 5. Democratic consolidation 6. Determinants of democracy 7. Political identities and the nature of conflict 8. Democracy in a picture 9. Overview of the book Section 3. What Do We Know About Democracy?: 1. Measuring democracy 2. Patterns of democracy 3. Democracy, inequality and redistribution 4. Crises and democracy 5. Social unrest and democratization 6. The literature 7. Our contribution Part II. Modelling Politics Section 4. Democratic Politics: 1. Introduction 2. Aggregating individual preferences 3. Single-peaked preferences and the median voter theorem 4. Our workhorse models 5. Democracy and political equality 6. Conclusion Section 5. Nondemocratic Politics: 1. Introduction 2. Power and constraints in nondemocratic politics 3. Modeling preferences and constraints in nondemocracies 4. Commitment problems 5. A simple game of promises 6. A dynamic model 7. Incentive compatible promises 8. Conclusion Part III. The Creation and Consolidation of Democracy Section 6. Democratization: 1. Introduction 2. The role of political institutions 3. Preferences over political institutions 4. Political power and institutions 5. A 'static' model of democratization 6. Democratization or repression? 7. A dynamic model of democratization 8. Subgame perfect equilibria 9. Alternative political identities 10. Targeted transfers 11. Power of the elite in democracy 12. Ideological preferences over regimes 13. Democratization in pictures 14. Equilibrium revolutions 15. Conclusion Section 7. Coups and Consolidation: 1. Introduction 2. Incentives for coups 3. A static model of coups 4. A dynamic model of the creation and consolidation of democracy 5. Alternative political identities 6. Targeted transfers 7. Power in democracy and coups 8. Consolidation in a picture 9. Defensive coups 10. Conclusion Part IV. Putting the Models to Work Section 8. The Role of the Middle Class: 1. Introduction 2. The three-class model 3. Emergence of partial democracy 4. From partial to full democracy 5. Repression: the middle class as a buffer 6. Repression: soft-liners vs. hard-liners 7. The role of the middle class in consolidating democracy 8. Conclusion Section 9. Economic Structure and Democracy: 1. Introduction 2. Economic structure and income distribution 3. Political conflict 4. Capital, land and the transition to democracy 5. Financial integration 6. Increased political integration 7. Alternative assumptions about the nature of international trade. 8. Conclusion Part V. Conclusion and The Future of Democracy Section 10. Conclusion and the Future of Democracy: 1. Paths of political development revisited 2. Extension and areas for future research 3. The future of democracy Part VI. Appendix Section 11. Appendix to Section 4: The Distribution of Power in Democracy: 1. Introduction 2. Probabilistic voting models 3. Lobbying 4. Partisan politics and political capture.

https://bilder.buecher.de/zusatz/20/20853/20853950_vorw_1.pdf

Economic Origins of Dictatorship and Democracy

The evidence from individual cases and from cross-country analysis supports the view that globalization leads to faster growth and poverty reduction in poor countries. To determine the effect of globalization on growth, poverty, and inequality, the authors first identify a group of developing countries that are participating more in globalization. China, India, and several other large countries are part of this group, so well over half the population of the developing world lives in these globalizing economies. Over the past 20 years, the post-1980 globalizers have seen large increases in trade and significant declines in tariffs. Their growth rates accelerated between the 1970s and the 1980s and again between the 1980s and the 1990s, even as growth in the rich countries and the rest of the developing world slowed. The post-1980 globalizers are catching up to the rich countries, but the rest of the developing world (the non-globalizers) is falling further behind. Next, the authors ask how general these patterns are, using regressions that exploit within-country variations in trade and growth. After controlling for changes in other policies and addressing endogeneity with internal instruments, they find that trade has a strong positive effect on growth. Finally, the authors examine the effects of trade on the poor. They find little systematic evidence of a relationship between changes in trade volumes (or any other measure of globalization they consider) and changes in the income share of the poorest-or between changes in trade volumes and changes in household income inequality. They conclude, therefore, that the increase in growth rates that accompanies expanded trade translates on average into proportionate increases in incomes of the poor. Absolute poverty in the globalizing developing economies has fallen sharply in the past 20 years. The evidence from individual cases and from cross-country analysis supports the view that globalization leads to faster growth and poverty reduction in poor countries.

/pdf/trade-growth-and-poverty-12dp2l8wvf.pdf

Trade, growth, and poverty*

https://openknowledge.worldbank.org/bitstream/handle/10986/14241/WPS3408.pdf;sequence=1

China's (uneven) progress against poverty

This paper assesses the current state of evidence on the impact of trade policy reform on poverty in developing countries. There is little empirical evidence addressing this question directly, but a lot of related evidence on specific aspects. We summarize this evidence using an analytic framework addressing four key areas: economic growth and stability; households and markets; wages and employment and government revenue. Twelve key questions are identified and empirical studies and results are discussed. We argue that there is no simple generalizable conclusion about the relationship between trade liberalization and poverty, and the picture is much less negative than is often suggested. In the long run and on average, trade liberalization is likely to be strongly poverty alleviating, and there is no convincing evidence that it will generally increase overall poverty or vulnerability. But there is evidence that the poor may be less well placed in the short run to protect themselves against adverse effects and take advantage of favorable opportunities.

/pdf/trade-liberalization-and-poverty-the-evidence-so-far-59kawhxtwc.pdf

Trade Liberalization and Poverty: The Evidence So Far

When average income rises, the average incomes of the poorest fifth of society rise proportionately. This is a consequence of the strong empirical regularity that the share of income accruing to the bottom quintile does not vary systematically with average income. The authors document this empirical regularity in a sample of 92 countries spanning the past four decades and show that it holds across regions, periods, income levels, and growth rates. The authors next ask whether the factors that explain cross-country differences in the growth rates of average incomes have differential effects on the poorest fifth of society. They find that several determinants of growth--such as good rule of law, opennness to international trade, and developed financial markets--have little systematic effect on the share of income that accrues to the bottom quintile. Consequently, these factors benefit the poorest fifth of society as much as everyone else. Thee is some weak evidence that stabilization from high inflation and reductions in the overall size of government not only increase growth but also increase the income share of the poorest fifth in society. Finally, the authors examine several factors commonly thought to disproportionately benefit the poorest in society, but find little evidence of their effects. The absence of robust findings emphasizes that relatively little is known about the broad forces that account for the cross-country and intertemporal variation in the share of income accruing to the poorest fifth of society.

/pdf/growth-is-good-for-the-poor-5g0g06c420.pdf

Dollar, David Kraay, Aart

Papers

Growth is Good for the Poor