Inequality in income distribution as a factor that harms economic growth

This article analyzes the existing theoretical approaches to the interpretation of the relationship between inequality and economic growth. The discussion about the direction and nature of the relationship between the variables continues. At the same time, a significant part of the existing work confirms the negative impact of income inequality on economic growth and explains this connection by political institutions, investment in human capital, rents, and other factors. In the study, we evaluated the nature of the relationship between inequality and the level of gross regional product (GRP) of the Russian regions using cluster analysis and scatterplots. Based on the use of a tree diagram and the k-means method, the country’s regions were divided into 7 clusters, however, a general trend in the relationship between inequality and the level of GRP has not been found. The results of scattering diagrams can be interpreted by Kuznets’s theory, which suggests the influence of economic growth on increasing inequality in developing economies.