WEALTH DISTRIBUTION AND

The role of wealth distribution has been subject to intense scrutiny in the theory of economic growth. This essay examines the interdependence between wealth distribution and economic growth prospects. The impact of wealth distribution on growth is being examined in the contexts of neoclassical growth, human capital and political economy. In addition, implications of wealth condensation in simulated economies are considered briefly. The study reveals that there is a wide, though not unanimous, consensus on income equality having a positive effect on economic growth. Moreover, securing investments in human capital and alleviating market imperfections could be instrumental in achieving higher levels of growth and a more equal distribution of wealth. There are, however, some forces that might deter growth. First, some simulations indicate that wealth condensates to the few in the long run in despite redistributive policies. Second, strong interest groups can use their political clout to alter wealth redistribution and subsequently hamper growth