The End of Growth with Equity? Economic Growth and Income Inequality in East Asia

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Editor’s Note: The article first appeared in

AsiaPacific Issues

, No. 101, July 2011, published by the East-West Center.

Executive Summary: 

During the closing decades of the twentieth century, much of the world witnessed a substantial increase in economic and social inequalities. Following a period of “growth with equality” that featured economic growth and social redistribution in East Asian countries shortly after World War II, a new era of “growth with inequality” has been ushered in. This leads to a divided society, threatens democratic institutions and suffocates economic growth. Looking forward to the next half century, will East Asia, a major area of economic growth of the 21st century, become increasingly unequal economically and socially?

The experience of China, a country that has seen a period of both spectacular economic growth and rapid income inequality increase, suggests that the state can serve both as an inequality creator and an equality enforcer. As equitable distribution of benefits of economic growth requires forces beyond the market alone, national policies are required to address the causes of rising inequality and create opportunities that will have beneficial long-term effects.