Economic inequality has become a major aspect of every economic, political, and social study in our world today. Multiple scholarly articles refer to it as the dependent variable that is caused by either governmental policies, technological advancement, or globalization. This seems to be the case in almost all of the developed countries. However, in developing countries, the limited variables are not limited to three causes mentioned previously. This part of the report on economic inequality will further explore the factors that lead to economic inequality in developing countries using Egypt and South Africa as examples.
Economic inequality is often associated with neoliberalism and free trade. It is undisputed that borderless movement of capital, goods and services has manifold benefits for the global economies. Unfortunately, it is developing countries, which suffer the most from shortcomings of globalization based on the promotion of free markets. The pursuit of free markets sidelines the considerations of smart regulation and sustainable development. Ultimately, the neoliberal race to the bottom can widen the income gap between developed and developing countries. To this end, Egypt and South Africa are prominent examples of complicate patterns of income inequality in the modern world.

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As most Arab countries in the region, Egypt historically had a relatively moderate level of income inequality. The poor have been mostly limited to the rural areas of the country. Due to a developed agriculture and fertile lands, however, the distribution of income has historically remained balanced in Egypt. The most significant gap lies between four largest cities of Egypt and all other regions rather than between rural and urban communities as such. (Adams, 1-4) The political crisis that followed the Arab Spring has had a detrimental effect on incomes in general but has hit urban centers the hardest, which has also contributed to narrowing the rural-urban gap.

In contrast to Egypt, South Africa presents a very different picture in economic inequality. The income gap there is strongly connected to the factor of race. Poverty is sharply concentrated in the group of Black South Africans. The numbers are striking in this respect: at the beginning of the century Black South Africans accounted for 78% of the entire country population and for 95% of all the poor. (Woolard, 2-3) The racial divide also contributes to the rural-urban gap that is much wider in South Africa than Egypt. Furthermore, the complexity of ethnicities and backgrounds in South Africa is characterized by the fact that some particular ethnic minorities (e.g. San) are almost entirely placed under the category of “extremely poor”. All these divisions make South Africa one of the most unequal societies in the world.

The political context relevant for studying economic inequality is fundamentally different in Egypt and South Africa. In the former, the most significant factor of recent decades was the 2011 events of the Arab Spring when Mubarak was ousted and ultimately imprisoned. (Verme, 120) The post-revolutionary Egypt faced significant societal challenges when attempting to democratize its political system. During the transition period, the rule of law and the protection of private property have become very fragile. Appalling political corruption has led to the emergence of the new rich that reformatted the structure of the rich group in Egypt. (Khalil, ch. 18)

In contrast, South African politics are still in their post-apartheid stages. Even though the abolition of apartheid has been a major step towards the respect for human rights and a full-fledged democracy in the country, the social dynamic has never stabilized. South Africa remains a divided country with very weak national cohesion. As a result, the societal, political, and ethnic boundaries often replicate income inequality lines in South Africa. (James, 94-102)

To summarize, despite being situated on the same continent and having comparable economies, South African and Egypt have very few similarities in their economic inequality challenges.

  • Adams, Richard H. Nonfarm income, inequality, and poverty in rural Egypt and Jordan. Vol. 2572. World Bank Publications, 2001.
  • Asiedu, Elizabeth. “Foreign direct investment in Africa: The role of natural resources, market size, government policy, institutions and political instability.” The World Economy 29.1 (2006): 63-77.
  • James, Wilmot Godfrey, and Linda Van de Vijver. After the TRC: Reflections on truth and reconciliation in South Africa. Ohio University Press, 2001.
  • Khalil, Ashraf. Liberation square: inside the Egyptian revolution and the rebirth of a nation. Macmillan, 2012.
  • Verme, Paolo, et al. Inside Inequality in the Arab Republic of Egypt: Facts and Perceptions Across People, Time, and Space. World Bank Publications, 2014.
  • Woolard, Ingrid. “An overview of poverty and inequality in South Africa.” Working Paper for DFID, HSRC, Pretoria (2002).