Income Inequality and Economic Growth: A Comparative Study of Developed and Developing Countries

Abstract

This paper explores the relationship between income inequality and economic growth by comparing developed and developing countries. It examines whether income inequality helps drive economic progress or stifles it. Using recent data from 2018 to 2024, the study finds that the effects of inequality differ depending on the country’s level of development. In developed nations, moderate inequality may promote growth, but excessive inequality can lead to social and economic instability. In developing countries, high levels of inequality often hinder growth by limiting access to resources like education and healthcare. The findings suggest that policies aimed at reducing inequality, such as progressive taxation and social welfare programs, can support sustainable economic growth, especially in developing nations. This paper offers insights for policymakers on balancing inequality and growth.