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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. Kanbur Ravi, 2001. "Economic Policy, Distribution and Poverty: The Nature of Disagreements," Peace Economics, Peace Science, and Public Policy, De Gruyter, De Gruyter, vol. 7(2), pages 1-26, April.
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  7. Korinek, Anton & Mistiaen, Johan A. & Ravallion, Martin, 2005. "Survey nonresponse and the distribution of income," Policy Research Working Paper Series 3543, The World Bank.
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  13. Somik Vinay Lall & Sanjoy Chakravorty, 2005. "Industrial Location and Spatial Inequality: Theory and Evidence from India," Review of Development Economics, Wiley Blackwell, Wiley Blackwell, vol. 9(1), pages 47-68, 02.
  14. 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.
  15. 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, World Bank Group, vol. 10(1), pages 1-25, January.
  16. 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.
  17. Jian, Tianlun & Sachs, Jeffrey D. & Warner, Andrew M., 1996. "Trends in regional inequality in China," China Economic Review, Elsevier, Elsevier, vol. 7(1), pages 1-21.
  18. Jalan, Jyotsna & Ravallion, Martin, 1998. "Transient Poverty in Postreform Rural China," Journal of Comparative Economics, Elsevier, vol. 26(2), pages 338-357, June.
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  22. 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.
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Citations

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Cited by:
  1. Ravallion, Martin, 2009. "A comparative perspective on poverty reduction in Brazil, China and India," Policy Research Working Paper Series 5080, The World Bank.
  2. Petia Topalova, 2008. "India," IMF Working Papers 08/54, International Monetary Fund.
  3. 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.
  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, Elsevier, vol. 36(3), pages 329-340, June.
  6. World Bank, 2014. "India : Women, Work and Employment," World Bank Other Operational Studies 18737, The World Bank.
  7. Montalvo, Jose G. & Ravallion, Martin, 2009. "The pattern of growth and poverty reduction in China," Policy Research Working Paper Series 5069, The World Bank.
  8. Self, Sharmistha & Grabowski, Richard, 2009. "Modernization, inter-caste marriage, and dowry: An analytical perspective," Journal of Asian Economics, Elsevier, Elsevier, vol. 20(1), pages 69-76, January.
  9. Grabowski, Richard, 2009. "An alternative Indian model?," Journal of Asian Economics, Elsevier, Elsevier, vol. 20(1), pages 50-61, January.
  10. Arslan Razmi, 2008. "Is the Chinese Investment- and Export-Led Growth Model Sustainable? Some Rising Concerns," UMASS Amherst Economics Working Papers, University of Massachusetts Amherst, Department of Economics 2008-09, University of Massachusetts Amherst, Department of Economics.
  11. Saccone Donatella, 2011. "Potenze economiche emergenti: Cina e India a confronto.Istruzione e diseguaglianze," Department of Economics and Statistics Cognetti de Martiis. Working Papers, University of Turin 201113, University of Turin.
  12. Gentilini, Ugo & Webb, Patrick, 2008. "How are we doing on poverty and hunger reduction? A new measure of country performance," Food Policy, Elsevier, Elsevier, vol. 33(6), pages 521-532, December.

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