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In the name of ALLAH who is the In the name of ALLAH who is the most Beneficent and the Merciful.most Beneficent and the Merciful.
1. Economic Equality
2. Economic Efficiency
3. People Face Trade Offs
4. Life Example
5. What is Equality Efficiency Trade-off ?
6. Is there a trade off ?
7. Equality Vs Inequality
8. Income Distribution and Growth Sustainability
9. Economic Effects of Inequality
10. Advanced economies have steady growth
11. It’s a roller coaster for some
12. Lasting Effects
13. Factors effecting growth spells
14. No trade-off exists
It refers to equal life chances to provide all citizens with equal minimum of income, goods, and services
It looks at the distribution of capital, goods and access to services throughout an economy
An important ingredient in promoting and sustaining growth
An economic state in which every resource is optimally allocated to serve each individual or entity in the best way
It relates how well a market or economy allocate scarce resources to satisfy unlimited wants
Trade off is a situation that involve losing one quality or aspect of something in return for gaining another quality and aspect
An equity-efficiency trade off exists whenever activity in a given market may simultaneously increase productive efficiency and decrease distributive equality, or vice versa.
Many economists believe that there is trade-off between equality and economic growth.
Then why do governments try to reduce it?The answer is a simple one: Because there is NO trade-offEvery government would want wage gap and inequality if it was
good.
Inequality gives a sudden boost
But equality is much better
The growth through it might be slow but is sustainable
Some inequality is essential to the effective functioning of a market economy
Longer growth spells are robustly associated with more equality
Increased inequality may shorten growth duration
Social unrest and civil disobedience
Limited access to health care and education
Volatile incomes, high debts
Capital investments skewed towards preferences of the rich
• Countries in the chart• United Kingdom• United States• Both have a graph that is going uphill smoothly• There are no sudden drops
• Four countries in the chart • Brazil and Chile have a smooth ride• For Cameroon and Jordan
it’s a roller coaster
•The graph has years in growth spells on y-axis and inequality on x-axis
•Clearly it can be seen when inequality is low growth spell lasts longer
•And the more the inequality, the less sustainable is growth
Factors include :
•Political Institution•Trade Openness•Exchange rate competitiveness•External Debt•Foreign direct investment•Most important factor is Income distribution
Inequality might give a sudden boost but it can also create a economic boom similar to 1930s and 2008
Growth this way is not sustainable Equality is better in the long run Growth through equality is sustainable And it actually increases economic growth by a fair margin Therefore there is no trade-off between inequality and efiiciency