Income inequality and economic growth: an empirical investigation in South Africa

Abstract

Over the past decade, increasing income inequality has been a major challenge for both developed and developing countries, with South Africa ranked as the most unequal country in the world. Such extreme income inequality is believed to lead to high unemployment and crime rates in the country. Although South Africa has suffered from the continuing rise in income inequality and sluggish economic growth, there have been limited studies done in this area. Therefore, this study contributes to the existing body of knowledge by empirically investigating the impact of income inequality on growth in South Africa from 1991 to 2017, using the Autoregressive Distributed Lag (ARDL) bounds testing technique. The long run results show that income inequality has a significant and negative impact on economic growth. This study also found that other control variables such as physical capital, population growth and government expenditure are significant and negatively affect economic growth. Only human capital was found to have a significant and positive impact on economic growth. The short run results found that human capital, population growth and government expenditure are statistically significant and negatively influence economic growth. While the results show that there is no relationship between income inequality and economic growth in the short run. Only physical capital was found to be positive and statistically significant in the short run. Based on the findings, this study recommends that policy makers should pursue policies that reduce income inequality in order to enhance economic growth in the country.

Kwiminyaka elishumi edlulileyo ukwanda kokungalingani kwemivuzo kube ngumceli mngeni omkhulu kumazwe aphuhlileyo kunye namazwe asaphuhlayo, kuquka noMzantsi Afrika othathwa njengelona lizwe lingalinganiyo kwihlabathi liphela. Kukholelwa ukuba ukungalingani okugqithise olo hlobo kukhokelela kumaqondo aphezulu entswelangqesho nolwaphulomthetho. Naxa uMzantsi Afrika ufumene ubunzima ngenxa yokwenyuka kokungalingani kwemivuzo kunye nokukhula kancinci koqoqosho, zinqongophele izifundo ezenziweyo ngalo mba. Ngako oko, olu phando ligalelo kumthombo wolwazi osele ukho ngokuthi luphande nzulu ifuthe lokungalingani kwemivuzo kuphuhliso eMzantsi Afrika ukusukela kunyaka we-1991 ukuya kowama-2017, ngokusebenzisa iAutoregressive Distributed Lag (ARDL) njengesakhelo sobuchule bokuphanda nokuvavanya. Iziphumo zexesha elide zityhila ukuba ukungalingani kuneempembelelo ezibalulekileyo nezimbi ekukhuleni koqoqosho. Olu phando lukwafumanise ukuba ezinye izinto eziguqukayo zolawulo ezifana nezakhiwo, ukwanda kwabemmi kunye nenkcitho karhulumente ziluchaphazela ngendlela engancumisiyo ukhulo loqoqosho. Zizakhono zabasebenzi kuphela ezifunyenwe zinefuthe elakhayo/elihle kuphuhliso loqoqosho. Iziphumo zexesha elifutshane zityhile ukuba abasebenzi, ukukhula kwenani labemi kunye nenkcitho karhulumente zinefuthe elibi nelikhulu ngokweenkcukacha-manani kukhulo loqoqosho. Naxa iziphumo zibonisa ukuba akukho kuzalana phakathi kokungalingani kwemivuzo kunye nokukhula koqoqosho kwixesha elifutshane, zizakhiwo kuphela ezafumaneka zinefuthe elithembisayo elibalulekileyo ngokweenkcukacha-manani kwixesha elifutshane. Ngokusekwe kwiziphumo, olu phando lucebisa abaqulunqi bomgaqo-nkqubo ukuba balandele imigaqo-nkqubo enciphisa ukungalingani kwemivuzo ukuze kuphucuke uqoqosho kwilizwe.

Kule minyaka eyishumi edlule, ukwanda kokungalingani kwemali engenile kube yinselelo enkulu emazweni womabili athuthukile nasathuthukayo, iNingizimu Afrika ibalwa njengezwe elinokungalingani kakhulu emhlabeni. Ukungalingani ngokweqile kwemiholo okuholela ekuswelekeni kwemisebenzi ngokusezingeni eliphezulu kanye namazinga obugebengu ezweni. Yize iNingizimu Afrika ihlupheke ngokuqhubeka nokwenyuka kokungalingani kwemali engenayo kanye nokukhula komnotho kancane, kube nezifundo ezifinyeziwe ezenziwe kule ndawo. Ngakho-ke, lolu cwaningo lufaka isandla kulolo hlaka olukhona ngokuphenya ngamandla omthelela okungalingani kwemali engenayo ekukhuleni eNingizimu Afrika kusukela ngo-1991 kuya ku-2017, kusetshenziswa inqubo yokuhlola yemingcele ye-Autoregressive Distributed Lag (ARDL). Imiphumela yesikhathi eside ikhombisa ukuthi ukungalingani kwemali engenayo kunomthelela omkhulu futhi omubi ekukhuleni komnotho. Lolu cwaningo luphinde lwathola ukuthi okunye ukuguquguquka kokulawula okufana nemali yokuqhuba umsebenzi ebonakalayo, ukukhula kwenani labantu kanye nezindleko zikahulumeni kubalulekile futhi kuthinta kabi ukukhula komnotho. Izimali zabantu kuphela ezitholwe zinomthelela omkhulu futhi omuhle ekukhuleni komnotho. Imiphumela yesikhashana ithole ukuthi imali yabantu, ukwanda kwabantu kanye nokusetshenziswa kwemali nguhulumeni kunezibalo futhi kunomthelela omubi ekukhuleni komnotho. Ngenkathi imiphumela ikhombisa ukuthi abukho ubudlelwano phakathi kokungalingani kwemali engenayo nokukhula komnotho esikhathini esifushane. Imali ebonakalayo kuphela etholakale inika ithemba futhi ibalulekile ngezibalo ngokuhamba kwesikhashana. Ngokuya ngokutholakele, lolu cwaningo luncoma ukuthi abenzi benqubomgomo kufanele balandele izinqubomgomo ezinciphisa ukungalingani kwemali engenayo ukuze kuthuthukiswe ukukhula komnotho ezweni.