Regional and International Economic Disparities since the Industrial Revolution: the Indian Evidence

Two general hypotheses dominate the literature on historical trends in regional disparities in income. The first holds that regional disparities increase within a country in the early stages of development, since the process of growth starts in a few areas; in time, growth will spread and regional incomes converge The second holds that the process of increasing disparity is cumulative, and that differentials widen over time (e.g. Myrdal, 1957, especially chs 3–5). This again can be applied both to differences within and between nations, but will apply more strongly to international differences, since the equalising factors, such as the movement of factors of production or government policies, will be weaker in the international case; on one view, indeed, disparity has been increased by imperialist exploitation, leading not only to slower growth of the colony but to actual immiserisation. Thus both hypotheses predict an increase in regional and international disparities in the initial stages of development; they diverge only about the later stages. To test either of them, one must define the phases of development. There is, of course, no single unambiguous definition but various measures of the degree of development within a country have been used: level of percapita income, structure of the labour force, composition of national income, and so forth.