The Developer’s Dilemma

Abstract

Abstract The developer’s dilemma is this: developing countries seek inclusive economic development—that is, structural transformation—sufficiently broad-based to raise the income of the poor. Inclusive economic growth requires falling income inequality to maximize 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 our 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 utilized to manage trade-offs between structural transformation, income inequality, and inclusive growth? We answer using a comparative case-study approach, contrasting nine developing countries, while employing a common analytical framework and a set of common data sets across the studies.