Can Economic Growth in Developing Countries Help to Escape Poverty and Inequality

The link between economic growth and income inequality has received much attention in recent decades. The purpose of this paper is to empirically analyze the relationship between economic development and poverty and income inequality for developing countries. By taking data for 36 countries for the last decades – 1990 to 2010 –, this research aims to find evidence for the Kuznets hypothesis. Unfortunately, the results show no evidence of the existence of a Kuznets curve, even when including control variables and re-estimating the relationship for subsamples. The variable real GDP per capita, as a measure of economic development, has no explanatory power for the degree of poverty or inequality.