ROLE OF DOMESTIC FACTORS: Income Distribution

Income distribution refers to how a country’s income is distributed among different individuals or groups. This distribution has a profound effect on the economic stability of a country as well as the quality of life of its citizens. Inequality in income distribution can lead to economic, social, and political unrest, and exacerbate poverty levels in countries. When income levels are unequal, the economic development of a country is highly affected. High-income earners—usually a small percentage of the population—tend to have more economic power than the rest of the population and are better positioned to benefit from economic growth. This leads to a widening of the wealth gap. Low-income individuals and those with limited access to resources are often left out of the economic gains and may even be shut out of the labor market altogether. When a nation has an unequal or inequitable distribution of income, it can also be a sign of political inequality. This also has implications for a country’s overall level of social and economic development. Countries with high levels of income inequality usually have higher rates of poverty. If the income gap between high and low-income earners is too large, it can lead to tensions and class struggles, which can further exacerbate existing disparities. Overall, income distribution can have a major bearing on a country’s economic development and its ability to provide equitable opportunities for its citizens. It is therefore important for governments to strive to ensure more equitable distribution of resources and income levels