Economic Inequality and Economic Development: Lessons and Implications of Global Experiences for the Arab World

This paper starts from the premise that economic inequality will be central to Arab policy makers concerns as they devise economic development strategies for the future. In this, the lessons from global experience may be useful in drawing implications for the Arab world. With this in mind, the core of this paper goes through seven case studies from around the world in the last fifty years, providing brief sketches of trends and patterns in the relationship between economic inequality and economic development. The central lesson to be learnt from these experiences is that initial structural inequalities matter in determining the equity of the growth path. Successful countries have addressed these structural inequalities through a range of policies. The paper then draws specific implications of the global experience for Arab policy makers, highlighting in particular: (i) focus on the distributional consequences of privatization, (ii) expansion of targeted CCTs and public works programs in place of generalized subsidies and (iii) a systematic approach to reducing gender inequalities.