The Relationship between Economic Development and Income Inequality in MIST (Mexico, Indonesia, South Korea, Türkiye) Countries: Panel Quantile Analysis

Abstract

Economic development and income distribution are among the most discussed topics in the economics literature. The relationship between economic development and income distribution becomes more important, especially considering the lack of resources in developing countries. In the study, the relationship between economic development and income distribution was analyzed in MIST countries (Mexico, Indonesia, South Korea, and Türkiye) for the period 1990-2019. In the study, in which the panel quantile regression estimator was used, the study reveals first that economic development reduces income inequality. Second, globalization can influence income inequality in various ways. While trade openness, which is one of the two indicators of globalization, reduces income inequality, foreign direct investment inflows, which is another indicator, increase income inequality. Third, the increase in industrialization, which is an indicator of technological development, increases income inequality.