The developer’s dilemma. Structural transformation, inequality dynamics, and inclusive growth

Macroeconomics - Economic growth - Monetary Policy
Review by: 
Armida Salsiah Alisjahbana
Kunal Sen
Andy Sumner
Arief Anshory Yusuf
Oxford University Press
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The developer’s dilemma is thus: developing countries seek inclusive economic development — i.e., structural transformation — sufficiently broad-based to raise the income of the poor. Inclusive economic growth requires falling income inequality to maximise income growth at the lower end of the distribution.

Yet, this is at odds with Kuznets’ hypothesis that economic development puts upward pressure on income inequality — at least in the absence of countervailing policies. Our book explores the developer’s dilemma between structural transformation and income inequality.

The core questions of the book are: (i) What are the varieties of structural transformation experienced in developing countries? (ii) What inequality dynamics are associated with each variety? (iii) Which policies have been utilised to manage trade-offs between structural transformation, income inequality, and inclusive growth?

These are answered using a comparative case study approach, contrasting nine developing countries while employing a common analytical framework and a set of common datasets across the studies.