ECON
The-Incredibles-2nd-Assignment.docx

Along with a high share of population over 65 years

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9% reduction (Senior Observatory, nd). Along with a high share of population over 65 years old, which was recorded as 15.5% in 1998, and increased rapidly up to 19.6% currently (The Connexion, 2018), hence France’s income inequality was gradually improved. Thus, the opposite trends of the trade openness and GINI index brought out a negative correlation coefficient between them, In contrast, India indicated an extremely strong and tight relationship between the trade openness and GINI, with a very high positive correlation of 0.813. This means the more India is opened to trade, the higher inequality in its national income. Moreover, over the past 50 years, the increase in trade openness was along with a high correlation coefficients, which reflects that there has been a clear diversification of India social classes in term of income.
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THE INCREDIBLES 8 Figure 5: Trade openness of India (Reproduced from Worldbank.org) Figure 6: GINI Index of India (Reproduced from Worldbank.org) As can be seen from the graphs above, in spite of some fluctuations of both factors, trade openness and GINI index showed upward trends during the period 1965-2015. With regard to the trade openness, the rate climbed up remarkably from 8.6% in 1965 to 41.95% in 2015, approximately 5 times higher. As interpreted in part a, the increase in exports and imports led to the upward trend in trade openness of India. Similarly, the GINI index also increased from 31.1% in 1965 to 35.15% in 2011, which indicates that the disparity among the social classes of India, in term of income, has been increasing. During the period 1970 - 1990,
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THE INCREDIBLES 9 India suffered a low economic growth and high poverty rate, which was caused by tightly regulated with socially planning. During the period, the country’s growth was insignificant at 3.5% per year (Paitnaik, 2018). Hence, the income disparity fluctuated slightly around 31 - 32%. In the following years, India inequality has been increasing substantially, typically in 2014, while the top 10 percent received 56% of national income, the top 1 percent of earners received 22% (ENS Economic Bureau , 2017). This becomes the top problems to be concerned in India, which was resulted from many reasons. Firstly, the country has experienced a high an increasing unemployment rate. During the past decade, unemployment rate unstoppably increased, up to now, the current rate is nearly 7.1 percent in 2018. According to Sushma U N (2018), about 31 million Indian people are seeking for jobs and even jobless, and the rate is anticipated to be continued. Therefore, lots of Indians have lost their income. Secondly, India is actually entering into a stagflation, in which not only the unemployment, it also suffered from a high inflation rate. Especially in 2008-2009, when the global financial crisis occurred intensively, the inflation rate of India reached the highest level of around 11%, as recorded by the Reserve Bank of India (Leahy, 2008). This led to the income inequality between the workers in organised and unorganised sectors.
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