Monday, May 9, 2016

In Asia, Income Inequality Gap Widens, Poverty Declines, Middle Class Grows

source: IMF
Income inequality is rising in China and India, the International Monetary Fund says. 

On the other hand, poverty has dropped since 1990, virtually across the board. 

Also the size of the Asian middle class has grown as well, since 1990, especially in urban areas.

Some might note the tension here, as well as the pattern observed in other economies over time. 

Inequality increases as poverty declines and the middle class grows.

Economists will debate whether, in fact, growth in inequality is an almost necessary evil for an economy that rapidly reduces poverty levels and grows the middle class.

That typically happens when an economy enters a growth phase based on new technology, some would note.

That is a positive underpinning for suppliers of Internet access, but rural gaps illustrate why it is so important to work hard on increasing Internet access in rural areas, where the middle class has not grown nearly as fast as in the urban areas.

As you might guess, there is a correlation between educational attainment levels and income.

The percentage of people with less than four years of schooling is much higher for the poorest quintile than for the richest quintile. This is particularly true in Bhutan, Cambodia, India, and Nepal, among other countries.
source: IMF

Likewise, access to financial services varies with income.  The share of adults with a bank account is much higher in the top 60 percent of the income distribution than in the bottom 40 percent. This is true in a number of Asian economies, including India, Indonesia, Vietnam, and the Philippines.

Much the same pattern exists in access to health care.

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