Tag Archives | structural transformation EconomicsEconomics, Poverty Reduction
Kuznets beyond Kuznets: Structural transformation and income distribution in the era of globalization in Asia
By Saumik Paul. Posted November 12, 2018
Inequality persists and so does the global concern over it. Kuznets’ views about the inverted-U relationship between inequality and development and the subsequent transformation process have been under the lenses of researchers for a long time. Kuznets’ theory proposed the inverted-U relationship through (i) a declining share of agriculture in total output and (ii) migration from the low-income agricultural sector to the high-income industrial sector (Kuznets 1955).
Economic development and growth entail large-scale structural transformation of economies. Many Asian and African economies are now undergoing such structural transformation—typically from agriculture to manufacturing and service sectors. This transformation inevitably involves reallocation of workers from the primary sector to the manufacturing and service sectors. One of the important questions arising is whether such growth led by structural transformation helps the poor. On the one hand, growth may lift people out of poverty and therefore improve living standards for everyone. On the other hand, growth may increase income inequality by benefiting the rich more than the poor.
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