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Structural transformation—Income inequality nexus in Africa: Does the Developer's dilemma hold?
Author(s) -
Ibrahim Muazu,
Vo Xuan Vinh,
Aluko Olufemi Adewale
Publication year - 2021
Publication title -
journal of public affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.221
H-Index - 20
eISSN - 1479-1854
pISSN - 1472-3891
DOI - 10.1002/pa.2194
Subject(s) - dilemma , nexus (standard) , inequality , economic inequality , income distribution , economics , transformation (genetics) , development economics , public economics , computer science , mathematics , mathematical analysis , biochemistry , chemistry , geometry , gene , embedded system
This article examines the developer's dilemma—a seeming quandary emerging from the fact that developing countries simultaneously pursue two different developmental goals: (a) seeking economic development through structural transformation and (b) reducing income inequality. However, the proclivity of increasing income inequality while pursuing structural transformation is often referred to as the developer's dilemma. This study investigates for the presence of this dilemma in Africa using sample splitting and threshold estimation technique. While we find support for the existence of a developer's dilemma, suggesting that structural transformation induces income inequality, the income inequality‐widening effect is disproportionate.