The relevance of analyzing social inequality to the process of economic development: an interpretation proposed by Gunnar Myrdal's institutionalist approach

Name: Carolina Coelho Ferreira
Type: MSc dissertation
Publication date: 28/04/2020

Namesort descending Role
Alexandre Ottoni Teatini Salles Advisor *

Examining board:

Namesort descending Role
Alexandre Ottoni Teatini Salles Advisor *
Octavio Augusto Camargo Conceição External Examiner *
Rogério Arthmar Internal Examiner *

Summary: This research aims to highlight the relevance of analyzing “social inequality” to the process of economic development. It is based on the hypothesis that inequality, in its multiple dimensions beyond income, is directly related to a nation’s low economic and social performances. To achieve this goal the research adopts the approach from Original Institutional Economics (OIE) in order to analyze the economic development process in a broader way, disregarding the restrictions imposed by the variables related to economic growth and per capita income. The approach suggested by Gunner Myrdal is chosen among the authors from the OIE due to his deep analysis of the social-related obstacles to the economic development of the least favored nations. Myrdal states that development has a sense of “upward movement of the entire social system”. Such an upward movement would occur through institutional reforms capable of promoting ruptures on the economic, political and social stratification. Furthermore, Myrdal’s multidisciplinary approach proposes that inequalities interact and are reinforced by the movement of Circular Cumulative Causation, justifying the need for broader institutional reforms. The main contributions of this research are: i) demonstrating that holistic and multidisciplinary approaches, like those from the Original Institutional Economics, present a theoretical framework capable of exploring the different shades of developmental analysis; ii) strengthening the premise that development analysis must address inequalities in its multiple dimensions, not limiting it to income gaps; iii) demonstrating how the development challenges identified by Myrdal in the 1960s and 1980s are strongly related to the challenges placed on the current debate; iv) emphasizing that inequalities operate not only as a consequence of “underdevelopment”, but especially as its cause. The study concludes that reducing inequalities in its multiple dimensions (beyond income), must be considered a key factor for the process of economic development, because inequalities have an impact no only on social activities but also on short and long terms results. For this reason, actions aiming to reduce inequalities must be found at the core of development planning programs.

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