Introduction In many developing countries, such as India, China, Thailand, and Vietnam, notable economic growth has been achieved over the last few decades. However, the growth is accompanied by huge increases in inequality, which is a threat to further economic growth and can also lead to serious social problems. As a result, many developing countries are seeking ways to fight against economic inequality —— progressive taxation is imposed on the rich and financial aid is provided to the poor, including a large amount of foreign aid. In the following section, I will take a close look at the economic inequality existing in developing countries, using Vietnam as a case study to find out the cause of the inequality, the effect of the inequality
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First, inequality harms economies stability and growth. Studies show that the economic growth may not be harmed by inequality in the short run; however, in the long run, inequality would hinder economic growth (Kang, 2012). Second, inequality increases violent crime. People are more likely to be violent and turn against each other if they think they were treated unfairly. In Vietnam, as income inequality keep growing, crime rate keep rising. Also, a great amount of research worldwide suggests that higher income inequality links to higher rate of violence and crime (Pare, 2014). Third, inequality may create the poverty trap. The poor living in an unequal society have far less opportunity than the rich, including good nutrition, health care, education and job opportunities. Thus, it’s much harder for the poor to generate wealth to improve their living standard. In most unequal societies, the rich keep becoming richer while the poor have very little chance to escape from poverty (Walder, 2008). Moreover, most people in unequal societies, such as Vietnam, are reported as living with stress, depression, status anxiety and mistrust, which is harmful for both physical conditions and mental health (Pare, …show more content…
Progressive taxation is imposed on the rich —— Vietnam personal income tax rate for the rich is 35% (The World Bank, 2015). Financial aid is provided to the poor in order to provide better health and education resources. Meanwhile, a large amount of foreign aid was also provided by wealthy countries such as US and Australia. The US government sended assistance teams to Vietnam to build health sector to improve HIV/AIDS prevention (The Economics, 2015). The Australian Government promised to provide an estimated financial aid of $83.6 million to Vietnam in 2016 (Australian Government Budget Report, 2016). In addition, The World Ban’s assistance program (WRI) invested more than 29 billion dollars of Official Development Assistance to help Vietnam reduce poverty and income
First, inequality harms economies stability and growth. Studies show that the economic growth may not be harmed by inequality in the short run; however, in the long run, inequality would hinder economic growth (Kang, 2012). Second, inequality increases violent crime. People are more likely to be violent and turn against each other if they think they were treated unfairly. In Vietnam, as income inequality keep growing, crime rate keep rising. Also, a great amount of research worldwide suggests that higher income inequality links to higher rate of violence and crime (Pare, 2014). Third, inequality may create the poverty trap. The poor living in an unequal society have far less opportunity than the rich, including good nutrition, health care, education and job opportunities. Thus, it’s much harder for the poor to generate wealth to improve their living standard. In most unequal societies, the rich keep becoming richer while the poor have very little chance to escape from poverty (Walder, 2008). Moreover, most people in unequal societies, such as Vietnam, are reported as living with stress, depression, status anxiety and mistrust, which is harmful for both physical conditions and mental health (Pare, …show more content…
Progressive taxation is imposed on the rich —— Vietnam personal income tax rate for the rich is 35% (The World Bank, 2015). Financial aid is provided to the poor in order to provide better health and education resources. Meanwhile, a large amount of foreign aid was also provided by wealthy countries such as US and Australia. The US government sended assistance teams to Vietnam to build health sector to improve HIV/AIDS prevention (The Economics, 2015). The Australian Government promised to provide an estimated financial aid of $83.6 million to Vietnam in 2016 (Australian Government Budget Report, 2016). In addition, The World Ban’s assistance program (WRI) invested more than 29 billion dollars of Official Development Assistance to help Vietnam reduce poverty and income