What is the link between inequality and development?
Inequality has a direct impact on growth (due to the decline in domestic demand linked to the middle classes), the concentration of wealth, the economic opportunities of populations, social cohesion, well-being, crime (due to the feeling of social injustice), political stability, etc.
Excessive inequality is therefore detrimental to development and can also affect the effectiveness of development aid. Intra-country inequalities have increased considerably in emerging countries over the past thirty years, so this is a dimension that must be borne in mind when dealing with development policies.
Studies also show that donor actions tend to increase inequality when, for example, they are directed towards financing infrastructure located in industrial clusters, rather than in remote locations where the poorest people live. Two conditions have been highlighted as crucial for public aid for development to reduce inequality in partner countries: (i) aid must be targeted towards the poorest; (ii) institutions in partner countries must ensure that aid actually reaches the targeted populations.