DYNAMICS OF INEQUALITY AND ECONOMIC GROWTH IN COUNTRIES WITH DIFFERENT INCOME LEVELS

Abstract

This article examines the relationship between economic growth, household income dynamics, and income inequality in the context of contemporary global development. The relevance of the study is driven by the growing discrepancy between aggregate macroeconomic indicators and the actual distribution of economic benefits across population groups. Despite sustained GDP growth in many countries over the past decade, reductions in income inequality remain uneven and often limited. This raises important questions about the inclusiveness of growth and the extent to which increases in national output translate into improvements in living standards for broad segments of the population. The purpose of the article is to assess the consistency between the dynamics of real economic output, household income, and income inequality across countries with different income levels during the period 2013-2023. The study is based on a comparative analysis of countries grouped according to the World Bank income classification. The methodological framework combines descriptive statistical analysis, including measures of variability, index-based normalization of key indicators to a common base year (2013 = 100), and comparative analytical techniques aimed at identifying structural differences in development trajectories. The results reveal substantial heterogeneity across country groups. In High-income economies, income growth is relatively well aligned with economic output and is accompanied by a gradual reduction in inequality, suggesting a more balanced pattern of development. Upper middle income countries demonstrate rapid income growth that significantly outpaces real production, while inequality remains largely unchanged, indicating limited redistribution effects despite expanding aggregate income. In Lower middle income countries, income growth is more broadly distributed and associated with a noticeable decline in inequality, reflecting a mass character of income expansion at intermediate stages of development. In contrast, Low-income countries exhibit a fragile pattern in which income growth occurs despite weak production dynamics and is often disconnected from structural transformation, while inequality tends to increase or remain persistently high. Based on these findings, the article proposes an authorial typology of development trajectories reflecting different configurations of growth and income distribution. The practical implications of the study lie in emphasizing that the evaluation of economic progress should not rely solely on output growth indicators but must incorporate distributional dynamics to assess the inclusiveness and long-term sustainability of development.