Inequality, growth, and democracy

The analysis of the relationship between inequality and economic growth in distinct politicoeconomic environments has been one of the central preoccup ations of the extensive theoretical and empirical work on growth in the las t decade. The authors argue that the empirical evidence available to date s trongly indicates the relevance of this work for understanding the elusive causal connection between economic development and democracy. The state of the literature suggests considerable sophistication in conceptualizing the direct economic effects of inequality and contains critical insights into p olitically unconstrained policy-making aimed at the alleviation of their ne gative economic impact. However, the political feasibility of the recommend ed policy measures and the politically mediated effects of inequality and r edistributive policy on growth and on the strength and stability of democra tic regimes are understood less well. The authors discuss the critical fact ors influencing these effects and sketch several approaches to creating a c omprehensive politicoeconomic account of the interaction between inequality , redistributive policy-making, and political regimes.