Blog #12 India, China see inequality rise with high growth: IMF

The article talks about how China and India have made great gains economically recently.  With that growth has also came a growth in inequality. The IMF said they need growth but they need equitable growth.   Christine Lagarde the managing director from the IMF said to the Brooking institution (a Washington based think tank) that the IMF has been advocating an economic shift in demand from external deficit to surplus countries as the key to re-balancing the global economy. She also explained that based on the IMF research, more equitable distribution of income can help promote economic and financial stability.  Brazil is a country that has dropped its inequality a lot since 1990, and if other countries could reduce inequality as much as Brazil, periods of high uninterrupted growth would last 50 percent longer. The article concludes by saying the answer is to improve competitiveness and have better functioning labor markets so that we can generate more jobs, and get people back to work. 

I believe this is a great article that tells how financial inequality holds back economic growth.  China and India have been growing rapidly but with an increase in inequality means that the really poor people are gaining wealth much slower than the better off.  The greater the income inequality the growth will not last as long is what the article claimed.  I believe this to be true.  The rich depend on the poor to run their factories and produce at low wages they also count on everyone to buy these products to turn around and make more products and grow.  If there are less people with the ability to buy these products because increasing inequality then the growth slows until it comes to a creep and we get into a situation with high unemployment because these manufacturers do not need so many works now that demand is lower.

http://profit.ndtv.com/News/Article/india-china-see-inequality-rise-with-high-growth-imf-301847