Inter-Country Inequiality in Social Indicators of Development

In 1955 Kuznets developed a hypothesis about the relationshipbetween the degree of personal income inequality within a countryand the level of economic development of the country. Thishypothesis suggests that with economic growth, interpersonalincome inequality first increases but after a certain pointstarts to decline. This is known as the inverted-U hypothesis. In1965, Williamson applied this inverted-U hypothesis to the widelyobserved pattern of intra-country regional inequality witheconomic development. This hypothesis was later extended tointer-country inequality in Per Capita Gross National Product(PCGNP) by Ram (1989). The paradigm of development economics hasrecently been shifted from PCGNP to human well-being and it hasbeen broadly accepted that economic growth does not automaticallytranslate into human well-being. The present study is an attemptto extend the application of the inverted-U hypothesis to explainthe relationship between inter-country inequality in socialindicators of development and economic growth.