Question

a) What are the various dimensions in which inequality exists in developing countries?

b) Which dimension of inequality do you consider to be the worst and most intolerable form of inequality?

c) Is income inequality considered to be bad from an economic point of view? Support your answer with clear arguments.

Answer 1

a)

Dimenstions in which inequality exists in developing countries are:

1) Income inequality: There are wide gaps in the income various people receive in a developing country. In such a country there are people who are involved in farm activities, daily wage labourers that earn lower income and also there are people who are a rich businessman or higher income earning officials and employees who earn high incomes.

2) Inequality in literacy: There is a wide gap in literacy rates in such countries as many do not get the opportunity to study.

3) Inequality in health care: Health care is a luxury nowadays that cannot be afforded by everyone. Poor and lower-middle-class still can't afford better health care facilities. This also happens because, in developing countries, the health care system is not well developed.

4) Wage inequality: This can be seen in various sectors of the economy.

5) Gender inequality: Sometimes men and women are not treated equally.

b)

The type of inequality that is considered the worse among all is income inequality. Income inequality is the root cause of many problems like poverty, illiteracy, poor health etc. It is a very common type of inequality in developing countries. It exists because there are wide gaps in the income various people receive in a developing country. In such a country there are people who are involved in farm activities, daily wage labourers that earn lower income and also there are people who are rich businessmen or higher income earning officials and employees who earn high incomes. Various government policies and taxes sometimes make it worse by making rich richer and poor poorer in the economy.

c)

Income inequality is not good for the economy as a whole. It increases the gap between rich and poor. If it keeps increasing rich will become richer and the poor will become poorer. This gap will keep widening and will result in an increase in poverty, illiteracy, poor health care, crime rates etc in an economy. Thus it is really bad for the economy and the government should implement policies that can reduce income inequality only then a developing country will prosper and show higher growth rates.