The firm is the flagship subsidiary of the giant Samsung Group, by far the biggest of the family-controlled conglomerates that dominate business in Asia's fourth-largest economy, and is crucial to South Korea's economy. Operating profit for July to September was predicted to reach 10.8 trillion won ($7.7 billion), down 31.7 percent from 15.8 trillion won a year earlier, the world's major maker of smartphones and memory chips said in a statement.īut the company said it expected sales to increase by 2.7 percent from the same period last year to 76 trillion won. For each of the three channels of political economy, capital markets, and social conflict, the empirical evidence is surveyed and discussed in conjunction with the theoretical analysis.The latest forecast is the company's first projection of a year-on-year decline in profit for nearly three years. It is not income inequality per se that matters, however, but inequality in the relative distribution of earning and political power. The economy's growth rate is shown to be a decreasing function of interest groups' rent-seeking abilities, as well as of the gap between rich and poor. The second model is a growth version of the prisoner's dilemma which captures the essence of theories where sociopolitical conflict reduces the security of property rights, thereby discouraging accumulation. It allows for explicit departures from perfect democracy and embodies the tradeoff between the growth costs and benefits of redistribution through taxes, land reform, or public schooling: such policies simultaneously depress saving incentives and ameliorate the wealth constraints which impede investment by the poor. The first model integrates the political-economy and imperfect-capital-market theories. Using two unifying models and an empirical exercise, this paper presents and extends the main theories linking income distribution and growth, as well as the relevant empirical evidence.
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