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Partially awakened giants : uneven growth in China and India

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  • Chaudhuri, Shubham
  • Ravallion, Martin

Abstract

The paper examines the ways in which recent economic growth has been uneven in China and India and what this has meant for inequality and poverty. Drawing on analyses based on existing household survey data and aggregate data from official sources, the authors show that growth has indeed been uneven-geographically, sectorally, and at the household level-and that this has meant uneven progress against poverty, less poverty reduction than might have been achieved had growth been more balanced, and an increase in income inequality. The paper then examines why growth was uneven and why this should be of concern. The discussion is structured around the idea that there are both"good"and"bad"inequalities-drivers and dimensions of inequality and uneven growth that are good or bad in terms of what they imply for both equity and long-term growth and development. The authors argue that the development paths of both China and India have been influenced by, and have generated, both types of inequalities and that while good inequalities-most notably those that reflect the role of economic incentives-have been critical to the growth experience thus far, there is a risk that bad inequalities-those that prevent individuals from connecting to markets and limit investment and accumulation of human capital and physical capital-may undermine the sustainability of growth in the coming years. The authors argue that policies are needed that preserve the good inequalities-continued incentives for innovation and investment-but reduce the scope for bad ones, notably through investments in human capital and rural infrastructure that help the poor connect to markets.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4069.

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Date of creation: 01 Nov 2006
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Handle: RePEc:wbk:wbrwps:4069

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Keywords: Rural Poverty Reduction; Achieving Shared Growth; Inequality; Population Policies;

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References

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  1. Jalan, Jyotsna & Ravallion, Martin, 1998. "Transient Poverty in Postreform Rural China," Journal of Comparative Economics, Elsevier, vol. 26(2), pages 338-357, June.
  2. Chen, Jian & Fleisher, Belton M., 1996. "Regional Income Inequality and Economic Growth in China," Journal of Comparative Economics, Elsevier, vol. 22(2), pages 141-164, April.
  3. Gaurav Datt & Martin Ravallion, 1998. "Farm productivity and rural poverty in India," Journal of Development Studies, Taylor & Francis Journals, vol. 34(4), pages 62-85.
  4. Ravallion, Martin & van de Walle, Dominique, 2006. "Does rising landlessness signal success or failure for Vietnam's agrarian transition?," Policy Research Working Paper Series 3871, The World Bank.
  5. Kanbur, Ravi, 2001. "Economic Policy, Distribution and Poverty: The Nature of Disagreements," World Development, Elsevier, vol. 29(6), pages 1083-1094, June.
  6. Au, Chun-Chung & Henderson, J. Vernon, 2006. "How migration restrictions limit agglomeration and productivity in China," Journal of Development Economics, Elsevier, vol. 80(2), pages 350-388, August.
  7. Xavier Sala-i-Martin, 2002. "The World Distribution of Income (estimated from Individual Country Distributions)," NBER Working Papers 8933, National Bureau of Economic Research, Inc.
  8. Kanbur, Ravi & Zhang, Xiaobo, 2003. "Spatial Inequality in Education and Health Care in China," CEPR Discussion Papers 4136, C.E.P.R. Discussion Papers.
  9. Anton Korinek & Johan Mistiaen & Martin Ravallion, 2006. "Survey nonresponse and the distribution of income," Journal of Economic Inequality, Springer, vol. 4(1), pages 33-55, April.
  10. Surjit Bhalla, 2002. "Imagine There's No Country: Poverty, Inequality, and Growth in the Era of Globalization," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 348.
  11. Aghion, Philippe & Caroli, Eve & García-Peñalosa, Cecilia, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Scholarly Articles 12502063, Harvard University Department of Economics.
  12. Lall, Somik V. & Chakravorty, Sanjoy, 2004. "Industrial Location and Spatial Inequality: Theory and Evidence from India," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  13. Ravallion, Martin & Datt, Gaurav, 1996. "How Important to India's Poor Is the Sectoral Composition of Economic Growth?," World Bank Economic Review, World Bank Group, vol. 10(1), pages 1-25, January.
  14. Ravallion, Martin & Shaohua Chen, 1998. "When economic reform is faster than statistical reform - measuring and explaining inequality in rural China," Policy Research Working Paper Series 1902, The World Bank.
  15. Arvind Virmani, 2005. "Policy regimes, growth and poverty in India : Lessons of government failure and entrepreneurial success," Indian Council for Research on International Economic Relations, New Delhi Working Papers 170, Indian Council for Research on International Economic Relations, New Delhi, India.
  16. Angus Deaton & Jean Dreze, 2002. "Poverty and Inequality in India: A Re-Examination," Working Papers 184, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
  17. Kanbur, Ravi & Zhang, Xiaobo, 1999. "Which Regional Inequality? The Evolution of Rural-Urban and Inland-Coastal Inequality in China from 1983 to 1995," Journal of Comparative Economics, Elsevier, vol. 27(4), pages 686-701, December.
  18. Bruno, Michael & Ravallion, Martin & Squire, Lyn, 1996. "Equity and growth in developing countries : old and new perspectives on the policy issues," Policy Research Working Paper Series 1563, The World Bank.
  19. Ravallion, Martin & Shaohua Chen, 2001. "Measuring pro-poor growth," Policy Research Working Paper Series 2666, The World Bank.
  20. Puja Vasudeva Dutta, 2005. "Accounting for Wage Inequality in India," PRUS Working Papers 29, Poverty Research Unit at Sussex, University of Sussex.
  21. Fleisher, Belton M. & Wang, Xiaojun, 2004. "Skill differentials, return to schooling, and market segmentation in a transition economy: the case of Mainland China," Journal of Development Economics, Elsevier, vol. 73(1), pages 315-328, February.
  22. Jian, Tianlun & Sachs, Jeffrey D. & Warner, Andrew M., 1996. "Trends in regional inequality in China," China Economic Review, Elsevier, vol. 7(1), pages 1-21.
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Citations

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Cited by:
  1. Arslan Razmi, 2008. "Is the Chinese Investment- and Export-Led Growth Model Sustainable? Some Rising Concerns," UMASS Amherst Economics Working Papers 2008-09, University of Massachusetts Amherst, Department of Economics.
  2. Montalvo, Jose G. & Ravallion, Martin, 2010. "The pattern of growth and poverty reduction in China," Journal of Comparative Economics, Elsevier, vol. 38(1), pages 2-16, March.
  3. Martin Ravallion, 2011. "A Comparative Perspective on Poverty Reduction in Brazil, China, and India," World Bank Research Observer, World Bank Group, vol. 26(1), pages 71-104, February.
  4. Luo, Xubei & Zhu, Nong, 2008. "Rising income inequality in China : a race to the top," Policy Research Working Paper Series 4700, The World Bank.
  5. Gentilini, Ugo & Omamo, Steven Were, 2011. "Social protection 2.0: Exploring issues, evidence and debates in a globalizing world," Food Policy, Elsevier, vol. 36(3), pages 329-340, June.
  6. Petia Topalova, 2008. "India," IMF Working Papers 08/54, International Monetary Fund.
  7. Self, Sharmistha & Grabowski, Richard, 2009. "Modernization, inter-caste marriage, and dowry: An analytical perspective," Journal of Asian Economics, Elsevier, vol. 20(1), pages 69-76, January.
  8. Robert W. Fogel, 2009. "The Impact of the Asian Miracle on the Theory of Economic Growth," NBER Working Papers 14967, National Bureau of Economic Research, Inc.
  9. Saccone Donatella, 2011. "Potenze economiche emergenti: Cina e India a confronto.Istruzione e diseguaglianze," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201113, University of Turin.
  10. Grabowski, Richard, 2009. "An alternative Indian model?," Journal of Asian Economics, Elsevier, vol. 20(1), pages 50-61, January.
  11. Gentilini, Ugo & Webb, Patrick, 2008. "How are we doing on poverty and hunger reduction? A new measure of country performance," Food Policy, Elsevier, vol. 33(6), pages 521-532, December.

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