Effects of Income Inequality in Asia
Asia has several emerging economies in the world. Countries like China and India have become a center of global economic attention because of their potential. Notably, China and India are the most populous nations on the planet taking the first and the second positions respectively. However, despite this growth, and the glittering future, Asia continues to experience widespread income inequalities in different countries like India, China, and Indonesia. The effects of income inequality in Asia are enormous. From poverty to poor infrastructure, many countries continue grappling with ways of taming the trend, which hampering economic growth in different ways.
What are the Effects of income inequality in Asia?
The rising level of income inequality in Asia is of great concern in the modern day and age. However, Asia is not alone since research shows that income inequality among emerging and developing economies in the world is on the rise. This is drawing the attention of policy makers. Today, the gap between the rich and poor in Asia continues to widen with no signs of the trend changing in the near future. As a result, the rich are getting richer while the poor become poorer every day.
The effects of income inequality in Asia cut across many countries. The first one is poverty. Asia today faces a serious economic scourge called poverty. While a few people in India, China, Indonesia and other Asian countries are living large because of massive wealth, majority are living below the poverty line. They cannot afford basic needs like food, safe water for drinking, and healthcare among other. Many cannot access good education, meaning they are likely to grow without enough education to guarantee them professional skills. Without going to school and later to college and earn a degree, the poor are destined for a dark future ahead, as the children of the rich attend the best schools and study abroad. This implies that income inequality in Asia remain a generational problem.
With an exception of China, it is important to note that East Asian countries have experienced rapid economic growth throughout history. Because of this trend, they have managed to keep their income inequalities at moderate levels.
Economic Effects of income inequality in Asia
The effects of income inequality in Asia vary from country to country. This is because Asian countries have continued to experience varying economic growth rates. For Japan, Taiwan, and South Korea, which pride in having considerable growth in the region, several factors have alleviated income inequality. For example, land reforms and agricultural restructuring have helped to improve the situation.
Throughout history, China has had a different experience in terms of inequality. Until 1970s, China, the most populous country in the world had the lowest level of inequality. This was attributed to the fact that China was a purely socialist country. However, with sweeping economic reforms towards the end of the 19th century, China grew into a market economy, leading to exponential economic growth, which subsequently led to high levels of inequality.
Today, China for example is the world’s fastest growing. However, despite this exemplary performance, China has the highest level of income inequalities in East Asia. Because of this trend, the growth cannot reduce the levels of poverty in China as it were for the other countries in the region we mentioned. According to economic experts, several factors have contributed to this case. Importantly, spatial labor mobility has contributed to urban-rural inequality in the country topping the global list.
India, another important country in Asia has had experiences that are not too far from China’s. For example, its economic reforms that saw its economy boom in the past 20 years have equal measure of effects on the vast poor. Today, the gap between the poor and the rich is ever increasing. In India, 10% richest people earn about 12 times more than the 10 percent that live in poverty, a pointer to unequal income distribution. The situation, which has contributed to high levels of poverty, appears to have doubled in since 1990s. Thus, the effects of income inequality in Asia continue to undermine economic growth in the region.
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References
http://asiafoundation.org/in-asia/2014/06/25/poverty-inequality-and-the-negative-effects-of-mongolias-economic-downturn/
http://www.ft.com/cms/s/0/e8bca4ec-bf29-11e3-a4af-00144feabdc0.html#axzz3xhs5xQBB
http://www.adb.org/publications/asian-development-outlook-2012-confronting-rising-inequality-asia
http://www.adb.org/sites/default/files/publication/41630/inequality-asia-and-pacific.pdf
https://www.imf.org/external/pubs/ft/sdn/2015/sdn1513.pdf
http://www.nzae.org.nz/wp-content/uploads/2012/06/Sumudu.pdf
http://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/4060.pdf