Bridging Gaps: Analysis Of Human Development, Income Inequality & Economic Growth In SAARC Countries (1985-2022)

Abstract

This study delves into the intricate relationships among Human Development, Income Inequality, and Economic Growth, emphasizing the pivotal role of Human Development in shaping the progress of SAARC's member states alongiwth China. The study also examines that how china got control over income inequality. Employing robust measures of Human Development, the research explores its influence on Economic Growth using a comprehensive panel data model, estimated through the Panel Least Square method. The selection between Fixed Effects and Random Effect Models is determined through the Hausman Test, ensuring the robustness of the analysis. The temporal scope of the study spans from 1985 to 2022. The major findings comprises that income inequality (G) has negative effect on human development (HD). Economic growth (EG), Gender Development Index (GDI) and mean year of schooling (MYS) has positive impact on human development (HD). On the other hand, CC (Control of Corruption), G (Income-Inequality) and HD (Human Development) accelerate EG (economic growth). Population growth per annum (P) results slow down the rate of EG (economic growth) in the SAARC regional states. Moreover, EG (Economic Growth) significantly increases the G, and agriculture area as percentage of total land area (AGL) and HD negatively and significantly affect income inequality (G) in the SAARC regional states. Summing up, human development positively and significantly accelerates economic growth, and economic growth enhance the level of human development ranking of the sample countries. Moreover, human development measure also significantly reduces income inequality. The study discerns that control of corruption and employment in agricultural (agri) sector on HDI has a negative impact. The relationship between Human Development Index (HDI) and economic growth is positive and statistically significant. This revelation suggests a strategic avenue for development— Encouraging the SAARC nations to invest in human capital emerges as a strategic imperative for accelerating their economic growth. By prioritizing education, skills development, and overall well-being of their populations, these countries can foster a more robust and sustainable foundation for economic progress. The new variable, that is, employment in agriculture sector has negative relationship with HDI and highly significant. It shows that if a country is moving higher at human development, then, employment in conventional agriculture sector would fall.