Nathaniel, I'm not sure that I understand your question well, but Nora Lustig has published a number of studies on what underlies improving equality in Latin America.

I don't know of any standard theory but reading around the the difference between economy growth and economy development discourse maybe helpful.

Nathaniel, I think your question concerns the Kusnets-curve, although this is not a theoretical but rather an empirical construct. The issue of income equality and growth is mainly adressed in the discussion of "shared" or "pro-poor growth", which was pushed forward by the World Bank a couple of years ago. A good place to start research on this topic is here:

http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/EXTPGI/0,,contentMDK:20264272~menuPK:524081~pagePK:148956~piPK:216618~theSitePK:342771~isCURL:Y,00.html

I hope you find this helpful,

Jörg

Yes! Jörg, I was just reading about this, as well. There's a good synopsis and critique by Saad-Filho here: http://www.un.org/esa/desa/papers/2010/wp100_2010.pdf

Is your question the following: "Does the fact of wanting to grow fast, itself have an impact on growth and equality?"

It is commonly assumed that faster growth implies more inequality. This is not proven.

Instead, I would ask "which sectors are growing, and which segments of the population will enjoy the benefits of that growth". For example, if you produce bananas, a trade deal which gives you better access to foreign markets will benefit banana growers. This is different from getting access to markets to sell high end electronics.

It will always be situation specific, and will depend on a) the structure of the economy of interest and b) its ability to integrate into global and/or regional supply chains and markets. That would be my economic theory.

Consider the following example for why there are no general rules. If you open up tourism, what impact will this have on the economic wellbeing of women, in absolute and relative terms? Many women will get jobs as cleaners, but many men will run businesses and earn far greater returns than the cleaners. Now consider this for the case of Morocco (women are fairly free) versus Saudi (not free).

Please read the following, from a recent World Bank publication:

"Forty years ago, a group of World Bank economists first highlighted the need

to view distributional objectives jointly with growth objectives and indeed to

express these objectives “dynamically in terms of desired rates of growth of

income of different groups” (Chenery et al. 1974, 38). Their quest reflected an

early vision of what would eventually become an integral part of the World Bank

Group’s strategy: fostering income growth of the bottom 40 percent of the population

in every country.

The information and data available in 1974 were far less comprehensive and

advanced than what we have at our disposal today, which currently include more

than 4,000 surveys of households and firms across 192 countries. We now have

data on a wide range of topics such as living standards, demographic characteristics

and health conditions, financial situations, constraints to growth, and investment

environments. This wealth of data helps to advance economic theory and to

better identify and evaluate the impact of economic shocks and policies."

These two paragraphs come from the foreword of "Shared prosperity : paving the way in Europe and Central Asia", published in April, 2014 and the full report can be found here www.worldbank.org/eca/sharedprosperity .

Indeed the World Bank has been working on this issue for a long time and the view is that distribution and growth are jointly determined and thus they should be jointly pursued.

Other relevant publications, apart from the still very good Chenery et al "Redistribution with growth" 1974 publication, are:

the 2006 World Development Report on equity: http://documents.worldbank.org/curated/en/2005/09/6297411/world-development-report-2006-equity-development

and, for a more technical approach, the two manuals on the impact of economic policies on poverty and income distribution (the focus in these manuals is to provide a bridge between macro and micro economic approaches in the assessment of the impact of economic policies):

1) Vol 1: http://documents.worldbank.org/curated/en/2007/01/9329518/impact-economic-policies-poverty-income-distribution-evaluation-techniques-tools

2) Vol 2: http://documents.worldbank.org/curated/en/2008/06/9880194/impact-macroeconomic-policies-poverty-income-distribution-macro-micro-evaluation-techniques-tools

One theory is that some amount of income redistribution can simultaneously reduce inequality and raise growth. The reason growth may rise is that the redistribution lowers the risk of entrepreneurial failure, which can lead to more research-oriented entrepreneurship. More generally, not only income redistribution, but also publicly provided health care and so on, can serve the same role of reducing both risk and inequality. See the paper by Penalosa and Wen in the Journal of Economic Growth, 2008, for a formal articulation of the theory.

Yes, Nathaniel, there is such a theory. Sen's concept of development as "the expansion of capabilities" or the "expansion of freedoms" explicitly links economic growth and inequality as means towards the desired end of "capability expansion." These separate processes can enhance each other and are both weaker without the other but neither is, in and of itself, the final objective. This approach does not offer a "how to" with respect to the challenge of development but it provides an excellent framework for relating (linking) both these processes to the ultimate objective and to each other. I recommend the Introduction and the first two chapters of Amartya Sen's "Development as Freedom" as a starting point.

All models that tax the rich and subsidize the poor falls in this category of development theory you seek. In stead of using the Keynesian Y + C+S, Nicholas Kaldor has used models that start with Y = Profit + Wage. He applied such models to numerous country in his Collected Economic Paper, Vol. 8, "Reports on Taxation II", Holmes and Meiers, NY, 1980. The countries studied include France, India, Ceylon, Mexico, Turkey, Iran, British Guiana, and Venezuela. 

All the other theories of distribution I know are based on socialism. You can look int I. V Kantorovich: Essay in Optimal Planning, Internationa Arts and science Press Inc, Whiteplains, N. Y. Also. see Morris Dobb, "An Essay o Economic Growth and Planning, Montly Review Press, N. Y. 1960.

Good luck in your research.

Lall Ramrattan

Thank you Very Much.

During the 1950’s and 1960’s, economic growth was considered as the main element affecting development strategies. The increase in gross national product was supposed to ensure the achievement of other objectives such as reducing unemployment and poverty.

However, since the late 1960s, the importance attributed to the rapid economic growth effect on social development came under increasing criticism and considered insufficient. Authors such as Seers (1970), Myrdal (1968, 1971), Adelman and Morris (1973), Paukert (1973), Ahluwalia (1976a, 1976b) find that a rapid economic development is not sufficient to increase the volume of employment. Contrary, such a development leaves out a part of the population and emphasizes the inequalities among citizens.

It is from the 1990s that the debate about the relationship between economic growth, poverty and inequality has increased in the context of the analysis of the economic growth that benefits the poor, called pro-poor growth.

Thus, two possible definitions of pro-poor growth are discussed in the literature. The first, called absolute, considers growth as pro-poor if and only if poor people benefit from growth in absolute terms .i.e. the poor benefit from overall growth (Ravallion and Chen, 2003; Fiestas and Cord, 2004). The second is called relative, when the poor benefit from growth proportionally more than the non-poor i.e. which focuses both on reducing poverty and inequality (McCulloch and Baulch, 2000; Kakwani and Pernia, 2000; Son, 2004; Kakwani and Son, 2008).

In this context, different methods have been proposed for measuring pro-poor growth. For example, the Datt-Ravallion decomposition (Datt and Ravallion, 1992), the Growth Incidence Curve (Ravallion and Chen, 2003), the Rate of Pro-Poor Growth (Ravallion and Chen, 2003), the Growth-Elasticity of Poverty (Fiestas and Cord, 2004), the Poverty Bias of Growth (McCulloch and Baulch, 2000) and the Poverty Growth Curve (Son, 2004).

In the field of economic theory combining the pursuit of economic growth and equality in the distribution of income for developing and developed countries, I propose theories of building economic prosperity on the basis of interventionist, pro-development, countercyclical, Keynesian socio-economic policy based on the activation of both investment and supply economy, activating innovation and entrepreneurship, as well as activating consumption etc. through the use of coordinated instruments of fiscal policy and active monetary policy of central banking. Activation of consumption can be implemented, among others, through interventionist government programs of financial support for low-income citizens and support for housing construction. I described these issues in my scientific publications on the example of currently used with good results of pro-development Programs of active socio-economic policy which is part of the program package referred to as the Plan for Responsible Development, i.e. Family 500 Plus Program and Flat Plus Program (Mieszkanie Plus Program). In addition, the maintenance of high-quality standards in the area of ​​financial system security, credit risk management, financial transaction procedures and customer service at financial institutions, including commercial investment banks, is a key issue for maintaining high economic growth in the long-term. I have also described these issues in my publications, which are available on the Research Gate portal. I invite you to cooperation.

Best wishes