ERY Inctusive orowth: Governance Hao O @v Course Progress Dates Discussion Acknowledgement FAQs ‘f# Course / Governance / Section 2: Governance and Inclusive Growth ° < Previous Bv@vG@vG@v @ G Next> — Notifications x Unit 2.5: Governance, Inequality, and Poverty Pursue a veied certcate 1 Bookmark this page van a yanied carticate f competion to Support cur mission at 23k Dear a) 18Ce U Tas INCLUSIVE ¢ In addition to the dampening effect on average ‘economic growth, poor governance exacerbates Poverty and inequality. + Corruption, as well as tax evasion, which is being enabled by corruption, contribute to inequality and to perceptions of unfairess—undermining citizens’ trust in their governments. Corruption can further increase inequality through its negative impact on social spending, as government-funded programs and subsidies extend benefits to wealthy population {groups and funds are siphoned from poverty alleviation programs. Perceptions of inequality and ‘eroded confidence in the rule of law increase the probability of social conflict. + Empitical esearch shows that, indeed, poor governance is associated with higher income inequality. Worsening in the corruption index of an. average country by one standard deviation is. associated with the same increase in income inequality as a reduction in average secondary schooling of 2.3 years. A one-standard deviation increase in corruption reduces income growth of the poor by 7.8 percentage points per year (Gupta, avood! and Alonso-Terme 1998). The resulting poor growth and inclusiveness can, in turn, lead to increased incidence of poor governance, creating a negative feedback loop that can become self-fulfilling, long lasting, and particularly detrimental to inclusive growth, ‘The figure below (IMF, 2016) summarizes the linkages. between corruption and inclusive growth « Previous, Next > © an res 218Affiliates dX for Business Open ed Careers News Legal ‘Tenms of Service & Honor Code Privacy Policy ‘Accessiblity Policy Trademark Policy ‘Sitemap Cookie Potcy Your Privacy Choices Connect Idea Hub Contact Us. Help Center ‘Security Media Kit noOnos © 2023 edX LLC. All rights reserved, SUID AATIRAT) MICPIH170442998-2 38