Globalisation and Unequal Development

In the development economics literature, income inequality changes are typically explained using an “evolutionary paradigm” or a “policy paradigm”. This chapter argues for modifications of these approaches that add historicity and geography to provide a better explanation. The key is to recognise “punctuated gradualism” (or turning points) as an appropriate model for inequality change and the ideology of governance as the important variable that directs the distribution of income. This leads to a theory of transitions which builds on the answers to three questions. First, how are pre-transition or initial distributions generated? Second, why do some transitions lead to substantial inequality change while other transitions do not? And the third, why are between-transition distributions generally trend-less and static? This chapter discusses globalisation as a transition (or turning point) in developing economies and argues that it can lead to new ideologies of governance and geographical restructuring, which becomes a significant determinant of inequality change. The final discussion focuses on China and India to show how income and regional inequality have increased during globalisation.