Davide Furceri

Bin Grace Li

Ms.Stefania Fabrizio

Mrs.Sandra V Lizarazo Ruiz

Adrian Peralta-Alva

Mr.Futoshi Narita

Mr.Rodrigo Garcia-Verdu

Ms.Marina Mendes Tavares

Despite sustained economic growth and rapid poverty reductions, income inequality remains stubbornly high in many low-income developing countries. This pattern is a concern as high levels of inequality can impair the sustainability of growth and macroeconomic stability, thereby also limiting countries’ ability to reach the Sustainable Development Goals. This underscores the importance of understanding how policies aimed at boosting economic growth affect income inequality. Using empirical and modeling techniques, the note confirms that macro-structural policies aimed at raising growth payoffs in low-income developing countries can have important distributional consequences, with the impact dependent on both the design of reforms and on country-specific economic characteristics. While there is no one-size-fits-all recipe, the note explores how governments can address adverse distributional consequences of reforms by designing reform packages to make pro-growth policies also more inclusive.

Macro-Structural Policies and Income Inequality in Low-Income Developing Countries

Mr.Giovanni Melina

Mr.Chris Papageorgiou

Hites Ahir

Hendre Garbers

Mattia Coppo

Ms.Filiz D Unsal

Vivian Malta

Xin Tang

Daniel Gurara

Luis-Felipe Zanna

Linda G. Venable

Mr.Kangni R Kpodar

Despite strong economic growth since 2000, many low-income countries (LICs) still face numerous macroeconomic challenges, even prior to the COVID-19 pandemic. Despite the deceleration in real GDP growth during the 2008 global financial crisis, LICs on average saw 4.5 percent of real GDP growth during 2000 to 2014, making progress in economic convergence toward higher-income countries. However, the commodity price collapse in 2014–15 hit many commodity-exporting LICs and highlighted their vulnerabilities due to the limited extent of economic diversification. Furthermore, LICs are currently facing a crisis like no other—COVID-19, which requires careful policymaking to save lives and livelihoods in LICs, informed by policy debate and thoughtful research tailored to the COVID-19 situation. There are also other challenges beyond COVID-19, such as climate change, high levels of public debt burdens, and persistent structural issues.

Advances Made in Five Key Areas Through a DFID-IMF Collaboration

Macroeconomic Research in Low-income Countries

Mr.Futoshi Narita

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