A NEW PERSPECTIVE ON ECONOMIC DEVELOPMENT AND INCOME INEQUALITY

Authors


Abstract

This paper shows that, based on Yang and Zhang's (2003) analysis, economic development can be viewed as an evolutionary process of division of labour that is driven by improvements in transaction efficiency. Both economic development and income inequality are consequences of this process; there is no systematic relationship between the two. Implications of the Yang-Zhang analysis for government policies, including the allocation of foreign aid, are also discussed.

Ancillary