The Relationship Between Inequality and Growth: The Case of The Baltic States

DOI: 10.5176/2251-2055_MME1231

Authors: Inese Brante

Abstract: The purpose of this article is to verify Kuznets theory about relationship between inequality and economic growth in the case of the Baltic States. This study is based on correlation analysis for two periods of time: from 1996 till 2010 and from 1996 till 2007 in each country: in Latvia, Lithuania and Estonia. The correlation analysis results are ambiguous. On the one hand there is no relationship between Gini coefficient as measure of inequality and GDP growth rate as the economic growth measure in five of the six created cases of the correlation analysis. On the other hand there is a strong positive correlation between parameters in the case of Latvia for the period of time from 1996 till 2007.

Keywords: inequality, Gini coefficient, economic growth, GDP