Technological Progress and Developing Countries

GDP growth: The study – covering advanced, emerging and developing countries – said technological progress, weaker trade unions, globalisation and tax policies that favoured the wealthy had all played their part in making widening inequality the defining challenge of our time . The IMF report said the way income is distributed matters for growth, according to The Guardian. If the income share of the top 20% increases, then GDP growth actually declines over the medium term, suggesting that the benefits do not trickle down. A report by five IMF economists dismissed trickle-down economics, and said that if governments wanted to increase the pace of growth they should concentrate on helping the poorest 20% of citizens. In contrast, an increase in the income share of the bottom 20% is associated with higher GDP growth, said the report. It said: Raising the income share of the poor, and ensuring that there is no hollowing-out of the middle class, is actually good for growth. Echoing the frequent warnings about rising inequality from the IMF managing director, Christine Lagarde, the report says governments around the world need to tackle the problem. (news.financializer.com). As reported in the news.