Exploring the effect of economic growth on income inequality in West African countries

Date
2021-05
Authors
Annan, Oswin Ato Kwamena
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Abstract
This thesis addresses two major issues: first, the effect of economic growth on income inequality in West African countries; and second, the impact of some macroeconomic factors on income inequality in West African countries. For the period 1990 to 2019, panel data for fourteen members of the Economic Community of West African States (ECOWAS) is examined. In order to answer the questions, the analysis employs a fixed-effects model. The findings of diagnostic experiments, such as cross-sectional dependency, heteroskedasticity, serial correlation, and Hausman, are used to choose the fixed effects model. The fixed-effects model confirms the effect on income inequality. Consequently, a conclusion that economic growth in West African countries has a negative and negligible effect on income inequality is drawn. In West African nations, the rate of inflation has a positive and significant effect on income inequality. On the other hand, unemployment and literacy rates have a negative and significant effect on income inequality. The thesis proposes that policymakers focus on raising literacy rates by investing in public schools and adult education services and reducing the impact of inflation by enacting economic policies that minimise inflation and income inequality.
Description
Undergraduate thesis submitted to the Department of Business Administration, Ashesi University, in partial fulfillment of Bachelor of Science degree in Business Administration, May 2021
Keywords
economic indicators, World Bank data
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