Growth with equity

MUST RAPID ECONOMIC GROWTH lead inevitably to greater inequality in the distribution of income? No. This book describes how Taiwan achieved growth with equity between the early 1950s and the early 1970s. It also offers explanations for this performance. The underlying purpose, however, is to present a general method of analyzing the behavioral interactions between growth and equity in any developing economy.

The analytical framework enables the authors to trace changes in the inequality of total family income over time to changes in the weights and inequalities of such income components as wage and property income. This decomposition of income inequality allows the authors to begin to forge a link between two areas of knowledge that heretofore have been somewhat isolated: development theory and the analysis of the size distribution of income.

The principal conclusion for policy is that the most reliable method of minimizing, or possibly even eliminating, a conflict between growth and equity is to make better choices about the ways in which output and income are generated. For example, the favorable performance of Taiwan is largely attributable to the early attention paid to agri culture and to the spatially dispersed and labor-intensive character of its industrialization. Direct government intervention through tax and relief measures is likely to be less important than often is assumed.