Chapter 4: Revisiting Shared Growth and Examining Horizontal Inequality
Anis Chowdhury and Iyanatul Islam Comparing communities in terms of inequality should not be performed in a vacuum; the study of income distribution and related issues cannot ultimately be divorced from the historical development of the social and economic system. Champernowne and Cowell (1998: 49) Wherever there is great property, there is great inequality. For one very rich man there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many. . . . The affluence of the rich excites the indignation of the poor, who are often both driven by want, and prompted by envy, to invade his possessions. Adam Smith (1976: 232) The global debate on the role of inequality in the process of economic development has gone through several phases. A particular paradigm prevailed between the onset of the structural adjustment programmes (SAP) in the 1980s and the celebration of the ‘East Asian economic miracle’ in the early 1990s. The emphasis was on how market-friendly, export-oriented development strategies in a handful of economies in East and Southeast Asia produced the phenomenon of ‘shared growth’. These economies were hailed by the World Bank for apparently being able to defy the so-called Kuznets inverted-U hypothesis that inequality first rises with growth before it declines.1 The miracle was not about these countries’ rapid and sustained growth, but that they could achieve it without worsening income distribution, and in some cases growth accompanied declines in inequality. According to the World Bank (1993: 3), ‘The HPAEs’ low...
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