Income inequality in the process of economic development : An empirical approach

This thesis studies the effect of income inequality on economic growth. This is done by analyzing panel data from several countries with both short and long time dimensions of the data. Two of the chapters study the direct effect of inequality on growth, and one chapter also looks at the possible indirect effect of inequality on growth by assessing the effect of inequality on savings. In Chapter two, the effect of inequality on growth is studied by using a panel of 70 countries and a new EHII2008 inequality measure. Chapter contributes on two problems that panel econometric studies on the economic effect of inequality have recently encountered: the comparability problem associated with the commonly used Deininger and Squire s Gini index, and the problem relating to the estimation of group-related elasticities in panel data. In this study, a simple way to 'bypass' vagueness related to the use of parametric methods to estimate group-related parameters is presented. The idea is to estimate the group-related elasticities implicitly using a set of group-related instrumental variables. The estimation results with new data and method indicate that the relationship between income inequality and growth is likely to be non-linear. Chapter three incorporates the EHII2.1 inequality measure and a panel with annual time series observations from 38 countries to test the existence of long-run equilibrium relation(s) between inequality and the level of GDP. Panel unit root tests indicate that both the logarithmic EHII2.1 inequality measure and the logarithmic GDP per capita series are I(1) nonstationary processes. They are also found to be cointegrated of order one, which implies that there is a long-run equilibrium relation between them. The long-run growth elasticity of inequality is found to be negative in the middle-income and rich economies, but the results for poor economies are inconclusive. In the fourth Chapter, macroeconomic data on nine developed economies spanning across four decades starting from the year 1960 is used to study the effect of the changes in the top income share to national and private savings. The income share of the top 1 % of population is used as proxy for the distribution of income. The effect of inequality on private savings is found to be positive in the Nordic and Central-European countries, but for the Anglo-Saxon countries the direction of the effect (positive vs. negative) remains somewhat ambiguous. Inequality is found to have an effect national savings only in the Nordic countries, where it is positive.

Governance Matters : China's Developing Western Region with a Focus on Qinghai Province

This study is about governance in contemporary China. The focus is on Qinghai Province, one of the twelve provincial-level units included in the western region development strategy launched in 2000 by the government of China. Qinghai, the subject of the case study, is not a very well-known province. Hence, this study is significant, because it provides new knowledge about the province of Qinghai, its governance and diverse challenges, and deepens one s overall knowledge regarding China. Qinghai province is one of the slowest developing regions of China. My research problem is to analyze to what extent provincial development correlates with the quality of governance. The central concept of this research is good governance. This dissertation employs a grounded theory approach while the theoretical framework of this study is built on the Three World s approach of analyzing the three main themes, namely, the environment, economic development, and cultural diversity, and to support the empirical work. Philosophical issues in the humanities and contemporary theories of governance are brought in to provide deeper understanding of governance, and to understand to what extent and how characteristics of good governance (derived from the Western canon) are combined with Chinese tradition. A qualitative research method is chosen to provide a deeper understanding of the contemporary challenges of Qinghai (and China) and to provide some insight into the role and impact of governance on provincial development. It also focuses on the Tibetan ethnic group in order to develop as full an understanding as possible about the province. The challenges faced by Qinghai concern in particular its environment, economic development, and cultural diversity, all of which are closely interrelated. The findings demonstrate that Qinghai Province is not a powerful actor, because it has weak communications with the central government and weak collaboration with its stakeholders and civil society. How Qinghai s provincial government conducts provincial development remains a key question in terms of shaping the province s future. The question is how is Qinghai s government best able to govern in a way that is beneficial for the people. This study demonstrates that this is a significant question that challenges governance everywhere, and particularly in China given the absence of democracy. This study provides the ingredients for reflection as to how provincial government can be motivated to choose to govern in a sustainable way, instead of leaning on growth factors with too little consideration about the impact on the environment and the people.

Herätys kylässä ja tuvissa : Rääkkylän Oravisalon kylä ja renqvistiläinen herätys 1820-luvulla

A Revival in a Village and its Households. The Village of Oravisalo in Rääkkylä Parish and the Renqvistist Revivalism in the 1820s. My purpose is to apply the science of religion and the study of past communities to the study of religious revivalism. Revivalism will be considered a religious phenomenon as well as a cultural and social phenomenon. What makes this study unique is the possibility to reconstruct a list of participating revivalists based on entries in the communion book of the time. The conflict between the revivalists and the chaplain of Rääkkylä also generated other documentary material. The community in Oravisalo was relatively stratified. People lived in complex and varying forms of households. They also had plentiful contacts both with unrelated inhabitants of Oravisalo and with the neighbouring villages. Through these contacts the inhabitants of Oravisalo were introduced to revivalism. In Oravisalo, the revival for the most part fell into a certain social stratum and did not severely damage existing relationships within families or among acquaintances. The revivalists formed a new community within the village but the community was neither very tightly-knit nor was it closed. The revival was an individual phenomenon affected by general factors. First, there were factors that brought about a quest for an applicable system of meanings. These factors included at least three important issues: the Great Partition of land, the crisis of slash-and-burn cultivation, and a population growth that increased the proportion of the landless in the village. As a result, many of the revivalists had low status and poor expectations for the future. Second, there were factors that appealed to the people in the message and character of the preacher, Henrik Renqvist. Third, the proximity of the village to Liperi, where the revival got its start, was crucial to revivalism s spread to Oravisalo. Culturally, the revival meant a change in the system of symbols or meanings, so it was not solely a matter of intensified religious fervour. For instance, Communion, prayer, reading, and perhaps baptism symbolised different things to the revivalists than to other villagers. However, the revivalists do not seem to have started any moral revolution in their village. The religious aspect defined the limits of the protest and the resistance towards authorities. The revivalists wanted only to have the right to follow their conscience. The freedom granted the female members was limited to the religious sphere. No social or economic claims were made. The revival altered the situation of its members only on a symbolic level, yet it also offered them status within their own group.