1

Social Justice and Inequality

Five Policy Messages for
Reducing Inequality
OMAR NOMAN AND TAIMUR KHILJI

If we dont change our direction, we are likely to

end up where we are headed.
Chinese proverb

Introduction
Ensuring social justice in Asia requires a
reduction in inequality. This volume is
concerned with both economic and social
forms of inequality. Within a country,
economic inequality is depicted by the
distribution of income and assets.The latter
type, horizontal inequality, comprises
disparities between groups in access to
public goods.The two types of inequalities
are often intertwined; deficits in access to
public goods, such as education, health and
infrastructure, result in fewer opportunities
for gainful employment. The outcome is
that a significant proportion of the
population in the region lies outside formal

structures and earns very little income.

Moreover, the lack of opportunity for
upward social and economic mobility for
certain groups encourages persistent
marginalization.To narrow these deficits in
social and economic outcomes requires
sustained effort on several fronts.
On the one hand, a high level of growth,
over a sufficiently long period, has led to
great prosperity across Asia. For a number
of fast-growing economies, poverty has
been reduced to negligible levels. Further,
the miracle tiger economies of Asia have set
a precedent that high levels of growth are
achieveable with little or no r ise in
economic inequality. 1 Their economic
development sends a clear message that

growth can be shared and reasonably

distributed. Thus defying the apparent
trade-off between growth and equity as
stated by Kuznets.2
On the other hand, since the early 1990s
Asias thumping growth momentum has
been accompanied by alarming levels of
economic inequality. The region still
comprises the largest concentrations of
extreme poverty; the number is close to a
billion. Moreover, over 600 million people
suffer from hunger. 3 The region has
witnessed a 10.5 percent increase in hunger
levels since 2008.4 The recent rise in fuel
and food pr ices (2006-2008) further
exposes the vulnerability of the poor to
external shocks.
Economic growth has been geographically confined; the pattern of development
in China and India are illustrative of growth
being limited to certain sectors and
geographical locations. Urban and coastal
China has grown disproportionately faster
than rural and inland China. The Chinese
government has recognized the need to
reduce these regional disparities through
government transfers, such as the Great
Western Development project. Indias
regional imbalances have been driven
mostly by inequalities across the agricultural
and service sectors. Over 50 percent of
Indias Gross Domestic Product (GDP) is
now der ived from ser vices, while
agricultures contribution towards GDP has
declined significantly.
A partial explanation for this dynamic
can be attributed to the fragmented nature
of global production, where parts of
industry and services are outsourced as a
cost-reducing/productivity-enhancing
measure. The outsourced jobs are drawn
from a pool of relatively skilled labor in the
recipient country, whereas in the developed

Social Justice and Inequality in Asia

country the same jobs would be drawn

from a pool of semi-skilled labor. What
makes outsourcing attractive is that recipient country real wages for (outsourced)
services are low by western standards, but
relatively high for the recipient country.
While productivity and wages in the Indian
IT and finance sectors have increased, other
sectors have flagged, thus widening the
wage differential between sectors.
The economic transfor mation in
Malaysia is also characterized by a very high
and persistent level of inequality (measured
by the gini coefficient). Growth is concentrated in the western states of the peninsula,
coinciding with the geographical location
of industry and services. Thailand and
Philippines show a strikingly similar pattern
of development. In the Philippines the
National Capital Region that encompasses
Manila accounts for more than a third of
the national economy, with a GDP three
times the national average. Likewise, the
central area in Thailand, which includes
Bangkok, accounts for only 0.2 percent of
the population below the poverty line,
whereas the northeast and southern states
account for 45 percent of the population
living below the poverty threshold.
Income-based inequality can also be
seen as a symptom of differential treatment
and lack of access to basic public goods and
services due to ones religion, gender or
ethnicity. Groups that are marginalized over
generations often find themselves at the
bottom of the income pyramid. Marginalization can extend far deeper than income
inequality, as many of the processes of marginalization are rooted in long-established
social hierarchies and cleavages. Often these
horizontal forms of inequalityinequality
based on differences between groups
form the basis of vertical and income-based

Social Justice and Inequality

inequality.This form of persistent inequality

based on deeply entrenched social and
cultural factors is a crucial hindrance to
equitable development.
The class, ethnic and racial division of
economic gain also defines the nerve
centers of political systems. The recent
policy responses by countries such as India
and China reflect this centrality of growing
inequality in the broader political space.
One of the reasons for the resounding
victory of the United Progressive Alliance
(UPA) in the 2009 elections in India was
the attempt to address the neglect of
agriculture and growing inequalities, with
public investment and public works
schemes aimed at providing security and
inclusive development for the poor.
In a continent that is now largely
democratic, issues of equity will shape the
future of gover nments. The slogan of
inclusive development can only be
sustained by serious attempts at reducing
inequalities. There is a need to develop a
policy framework based around egalitarian
principles. This volume, in small measure,
attempts to contribute towards such an
articulation by presenting a series of policyoriented country cases aimed at tackling
both social and economic inequality.

The Purpose of this Volume

This volume shares pragmatic policy
experiences derived from context-specific
analyses of trends and dynamics of
inequality. There is a plethora of technical
analysis and literature documenting poverty
and inequality trends, which has been the
focus of development economics since the
1950s. On the other hand, there has been
less work done on the policy side, especially
in terms of deriving policy from evidence
emerging from successful practices.This lag

in informed policy making is partly due to

the lack of relevant and reliable data over
an extended time horizon. Such data is only
recently becoming available, and with
accompanying improvements in data
analysis and assessment, the potential for
sound, evidence-based policymaking in
development is a real possibility.
The chapters in this volume, especially
the country policy chapters, attempt to
build on existing public policy responses to
inequality. In the five focus countries,
inequality assumes unique forms. The
historical trajectories and paths that lead to
and perpetuate a particular circumstance
depend on a myriad of cultural, economic
and political factors. Simply put: context
matters.
This is not to say that successful practices
cannot be adapted for replication in a
variety of contexts, but rather the policy
design has to be highlighted. Policies need
to be context-sensitive and appropriately
shaped to achieve specific development
objectives. For example, if a particular
school feeding programme has been
successful in Tamil Nadu, India, it may well
be replicated in another region or country.
However, the programme may require
adjustments to best meet the particular
needs of another site, taking care to leave
the human face of the design intact.5
In the current global recession, the
disparities between rich and poor become
sharper and more glaring. Although, all
income levels may be affected by the
downswing of markets, the poor in
developing Asia, especially those employed
in the informal economy, are generally not
covered by any form of social protection.
While some segments of society have access
to doctors, unemployment benefits, and
other welfare measures, there are others

who have no recourse to any safety net

mechanism.
Stimulus plans are a necessary step in the
right direction, but macroeconomic policies
are typically non-discriminatory in their
design. They are intended to stimulate the
economy in aggregate and not target any
particular group or segment of society.
Although the transmission of these stimuli
may affect regions and classes differently, the
aim is to boost aggregate demand and
remove supply side institutional constraints.
These macro-measures need to be
supplemented by interventions targeted at
populations that are most vulnerable and
without access to social safety nets. It is in
this spirit that Sir Richard Jolly suggests in
chapter 3 that the Keynesian stimuli currently being designed should incorporate
elements of redistribution. In chapter 4,
N.C. Saxena builds upon this suggestion in
his discussion of specific programmes and
policies that have reduced economic
inequality in different parts of the world.
Brazils institutionalized programme on
expanded minimum pensions to agricultural workers along with Kazakhstans
petroleum fund-based pension programme
that targets the elderly, unemployed, and
single mothers with young children are
discussed at some length in chapter 4.
So while stimulating growth is useful,
protecting the vulnerable and increasing the
capacities of the poor to make greater
contributions to overall growth is likely to
lead to sustained and more equitable
development.
This volume is concerned with tying
the general to the particular, by directing
policy focus towards creating a more
balanced growth trajectory where the needs
of the economically and socially marginalized are prioritized.

Social Justice and Inequality in Asia

The Structure of the Volume

This volume compr ises two pr imary
components: the three chapters that follow
this introductory chapter are thematic
overviews.These papers were first presented
at the Policy Dialogues on Inequality,
organized by UNDP Regional Center in
Colombo in December 2008. This policy
conference was held to honour Frances
Stewarts and her work on inequality.
Professor Stewart has shaped the debate on
horizontal inequalities through rigorous
research and transmission of the results
through several UN agencies. Her keynote
address, transcribed as chapter 2 provides a
thought-provoking overview of inequality,
with a focus on the social, political and
cultural dimensions of inequality. Identity
related inequalities can adversely affect
growth, poverty reduction and political
stability. People often find themselves
trapped in vicious cycles of persistent
inequality that are inherited. Professor
Stewart discusses two traps that perpetuate
inequality: the capability trap and the capital
trap. In the former, a low level of educational attainment is likely to be accompanied by poor access to healthcare and
therefore a reduced capability to earn.
Similarly, different sorts of capital (social,
financial, cultural, etc.) complement and
reinforce one another to determine life
outcomes. Depending on whether the
complementarities are positive or negative,
they either result in upwards spirals and
downward traps. The former allows for a
path out of depravity, while the latter keeps
inequalities intact. Therefore, we would
want to create the conditions that encourage upward spirals. To comprehensively
tackle persistent inequality requires
addressing the different sources of

Social Justice and Inequality

inequality (such as discrimination, differential access to public goods, skewed asset

distribution) so that negatively reinforcing
complementarities weaken over time.
Chapter 3 is written by another stalwart
of development, Sir Richard Jolly,6 who has
married his university research to applied
change through OECD, UNICEF, UNDP,
and other agencies. He writes on Redistribution with Growth, a strategy that has
become appealing again in the face of rising
inequality. Sir Jolly looks at inequality in its
historical context, especially with regard to
Sri Lanka. The chapter makes a case for
reviving many previous policy attempts to
growth as a strategy to narrowing the
income gap. It also weaves in the perspectives of the eminent late Lal Jayawardene on
causes of trends toward greater equality.This
chapter complements the Sri Lankan case
study, that appears as chapter 8, Inequality
in Sri Lanka:Trends and Policy Response
by Dileni Gunewardena; these two chapters
are best read together.
Chapter 4, Policy Options for Reducing Inequality, is written by a practitioner
in development, Naresh C. Saxena. In this
chapter the author reviews the efficacy of
policy instruments that have been used by
governments to reduce inequality over the
last two decades. Both vertical inequality
and horizontal inequality are examined and
successful country examples cited.Although
this volume concentrates on countries from
Asia, examples of successful initiatives from
countries outside the region are taken up
in this overview chapter. Brazil, Kyrgyzstan,
Kazakhstan, and Tunisia are chosen as
exemplars of reducing vertical inequality in
recent years. Similarly, within Asia, Malaysia
(ethnic), India (caste), and Bangladesh
(gender) have been chosen for their success
in addressing aspects of hor izontal

inequalities. Saxena cites specific measures

used for tackling horizontal inequalities.
These policy examples tie with Professor
Stewarts keynote address which is focused
more on the theoretical underpinnings of
horizontal inequality.

Five Policy Papers on Inequality

Chapters 5 through 9 form the core of the
book, and are based around five country
policy papers on inequality. The countries
are India, Indonesia, Nepal, Sri Lanka and
Timor-Leste. Together, they represent a
compelling mix of contexts. Indias
emergence as an economic force stands in
sharp contrast to the Least Economically
Developed Countr ies (LEDCs) and
conflict-affected countries. Timor-Leste
continues to struggle with the growing
pains of statehood, while Nepal and Sri
Lanka are marked by continued conflict and
stunted development. Although Sri Lanka
is considered the only middle-income
country in South Asia, there is much that
needs to be done by way of development.
Nepal, like Timor-Leste, is a LEDC.
Indonesia, an archipelago of over seventeen
thousand islands is still coming to terms
with the sudden decentralization and
democratization instituted after the fall of
Suharto.These differences in context from
one country to the next have led to varied
manifestations of inequality.
The country papers focus on the policy
responses that emerge from a nuanced
analysis of trends, causes, and current
government responses in tackling economic
inequality. The trends sections lay the
groundwork for identifying underlying
causes of growing inequality, and review the
pattern of income distribution over the past
couple of decades.7 Salient features that
drive economic inequality are identified

and stand as the backdrop against which

government policy responses are assessed.
The final section of each country paper is
policy focused. While paying attention to
existing constraints, the authors present a
series of policy recommendations tailored
to address the causes of inequality. The
policy sections recognize that inequality is
woven into power structures and addressing
it is simply not a technocratic exercise.
Measures to adjust the patterns of distribution of economic gains often involve a
struggle amongst powerful regions and
classes.
In chapter 5, Inclusive Growth and
Economic Inequality in India under
Globalization, Amitabh Kundu and
Niranjan Sarangi focus on the pattern of
spatial and social inequality in India,
analysing vertical and horizontal dimensions of inequality and the inter play
between them. They document the status
of economic inequality across social groups,
focusing on castes, tribes and religious
groups. The social landscape of the Indian
population is viewed through the lens of
regional disparity, where migration from
rural to urban areas emerges instrumental
in escaping poverty. However, with technological development of urban sectors,
absorption of rural poor has become increasingly difficult, leading to large pockets of
urban poor. Moreover, education and skill
level have become determining factors for
upward mobility. The second half of the
paper delves into the Indian governments
policy stance on addressing some of these
issues. The authors offer a comprehensive
purview of the governments development
strategy as well as the social impacts of its
implementation.The development strategy
encapsulated in the eleventh five-year plan

Social Justice and Inequality in Asia

is viewed as progressive in its ethos of

inclusive development, explicitly acknowledging persistent structural inequalities.
The plan, which also contains explicit
measures for addressing social and economic inequalities, appears to have contributed to UPAs reelection in 2009.
In chapter 6, Economic Inequality in
Indonesia, Satish Mishra begins by situating
inequality in its historical context, arguing
that inequality has reemerged as a central
concern of economic development. The
somewhat surprising finding of this chapter
is that, according to all income measures,
inequality in Indonesia has remained
relatively stagnant over the past thirty years.
This finding contrasts with the fact that
Indonesia is known to have high levels of
asset concentration, and is frequently
criticized for systematic corruption and
cronyism. Beyond this, geography also plays
a role; heterogeneity and diversity are
inherent for a country comprising over
seventeen thousand islands spread across
three-time zones. The author attempts to
resolve the apparent disconnect between
what development logic seems to suggest
to be rising inequality, and what the data
reveals as stable levels of inequality/equality.
The chapter provides a useful exercise,
examining possible proxy indicators to
uncover inequity not entirely captured
by income measures. By probing the
economic structure of the economy, wages,
asset concentration and other social
indicators, the author is able to analyse
different types of inequality.The author also
explores Indonesias continuing adjustment
to the great transformational change driven
by rapid decentralization. The new
structural set-up has important consequences for the resulting growth pattern.

Social Justice and Inequality

The chapters final sections look at the

policy stance of the government vis--vis
inequality since independence in 1949,
concluding with options for policymakers
to consider.
In chapter 7, Shiva Sharma explores the
sensitive relationship between conflict and
inequality in Nepal. For example, the
ongoing conflict has compromised the
countrys fiscal position as military expenditure has risen, while spending on key
development initiatives, such as infrastructure and public service delivery, has reduced.
Income inequality, as measured by the gini,
has worsened, with urban areas becoming
more unequal than rural areas. Although
Nepal remains an agrarian society with
agriculture representing the foremost
source of national income, employment
data reflects a shift away from agriculture.
This trend is in line with typical development trajectory, where over time the
contribution of the primary sector to GDP
diminishes as secondary and tertiary sectors
play more prominent roles. This trend is
confirmed in Nepals case, with the caveat
that the services sector, rather than manufacturing, has been the primary engine of
growth in recent years.While open conflict
has ceased, and the monarchy ousted, Nepal
is going through a period of structural
political realignment. It is arguably the first
case in history where Maoists came to
power through open multi-party elections.
Not surprisingly, issues of income and assets
redistribution are paramount for the Maoist
government. Often equitable allocation of
assets and income comes at the cost of
regulating and altering the incentives of the
market economy.This is likely to hurt local
private enterprise, which is still in its infancy
and requires a supportive environment.

Even during conflict Nepal sustained a

modest level of economic growth. Poverty
diminished, largely due to a significant
inflow of remittances. In fact remittances
from workers employed abroad are the
second largest source of national income in
recent years. One would have assumed that
a steady GDP with remittances contributing a significant amount would result in
a more even income distribution. Shiva
Sharma tries to resolve this paradox by
pointing out that remittance flows are
higher to households in the upper
consumption quintile, thus contributing to
increasing inequality.The chapter ends with
a comprehensive section on policy.
Dileni Gunewardena looks at inequality
in Sri Lanka in chapter 8.The country has
suffered economically and socially by the 25
year conflict. Despite the welcome end to
this conflict in 2009, winning lasting peace
will require measures to address horizontal
and vertical inequities. There have been
significant increases in the level of inequality, as measured by the gini, over the last
ten years; Sri Lanka has had inequality rise
faster than any other country in the region.
It has risen at the rate of nearly 10 percent
throughout the past decade in spite of
recording the largest decline in unemployment among countries in Asia and Pacific.
Chapter 8 also explores how group-based
inequalities interact with economic
inequality to reinforce each another,
resulting in poverty trapsa theme also
taken up by Professor Stewart in chapter 2.
The case of Sri Lanka is illustrative of
negative group dynamics that have led to
massive deficits between groups in access to
public goods and services. Regional
inequality is stark between the prosperous
Western and Central provinces on the one

hand, and the rest of the Island on the other.

Sector-wise, the estate sector and the
plantation community lag behind more
productive sectors such as manufacturing
and services. Within sectors, especially
highly productive sectors, rising vertical
inequality is driven by differences in skills
and assets. However, across sectors, say
between the less productive agriculture
sector and the fast growing industrial sector,
two persons with very similar skill sets and
endowments can face vastly different
returns. This discrepancy triggers strong
migratory forces that tend to equalize such
differentials over time.That these differentials persist in Sri Lanka suggests, however,
that there are barriers preventing the people
from lagging sectors and regions from being
absorbed into more productive areas of the
economy.
Beyond this, Gunewardena analyses the
impact of conflict, tsunami, and privatization of the plantation community on
income distribution. She then explores the
impact of inequality on growth, on poverty
reduction, and on the attainment of the
Millennium Development Goals. In the
policy section, the author recommends
measures to reduce inequality.These include
policies for agricultural productivity and the
rural non-farm sector; infrastructure and
access to markets; labour market and the
business environment; inequality between
plantation communities; as well as provision
of safety nets for marginalized groups.
In chapter 9, the final chapter of the
book, Sonny Haramdi and Rui Gomez take
up inequality in the first country of the 21st
century, Timor-Leste. Having gained
independence in 2002, the country is still
struggling to build institutional and political
capacity to address the needs of the people.

Social Justice and Inequality in Asia

The process requires fundamental development on almost all fronts: political,

economic, and social.The bulk of economic
activity still takes place informally. The
informal sector accounts for about 80
percent of the GDP, making it an arduous
task to provide an accurate reflection of
income distribution. As this bias runs
through time-series data, the analysis is able
to capture trends rather than levels. Overall,
it appears that income inequality has
decreased from 2001 to 2007. It decreased
in both urban and rural areas during this
period.The authors argue that relative easy
migration between rural and urban areas
kept regional inequality low. Additionally,
direct cash transfers to households in the
bottom quartile were critical in equalizing
incomes. By 2007, the contribution of the
government transfers to the gross income
of the bottom 25 percent of the income
distribution had risen to almost 34 percent.
The government is severely constrained in
its use of tax policy due to the informal
nature of economic activity. The authors,
thus, recommend the use of a petroleum
fundthe product of a revenue-sharing
treaty on energy extraction between
Australia and Timor-Lesteas a means of
increasing development expenditure, and
equalizing opportunity across Timor-Leste.

Reducing Inequality: Five Policy

Messages
Five policy areas for achieving more
equitable outcomes are identified as follows:
1. Progressive fiscal policy
2. Securing the poor
3. Enhancing governance for reducing
inequality
4. Improving rural productivity

Social Justice and Inequality

5. Involving international institutions

in reducing inequality

Progressive Fiscal Policy

It is important to emphasize the overarching
importance of progressive fiscal policy in
shoring up and using resources to reduce
inequality. Taxation as a measure of redistributing income is commonly cited, but
can be difficult to implement. Developing economies, especially the LEDCs in
the region, have large informal economies,
resulting in limited immediate potential for
direct taxation as a source of revenue.
Nonetheless, progressive policy that
combines both indirect and direct taxation
can have a major impact on inequality.
Further, targeted public spending is an
obvious, but often neglected, policy area for
addressing inequality.While public spending
must operate within the bounds of macroeconomic respectability, its magnitude and
pro-poor nature are key determinants of an
inclusive growth strategy.

Securing the Poor

In the absence of institutionalized welfare,
targeted interventions become a necessity
in providing a minimal welfare floor. In
addition to direct income transfers to raise
welfare, key areas where social safety net
measures can improve livelihoods, and
where there is evidence of successful
practice, are education, employment, health,
and food. The Indian gover nments
National Rural Employment Guarantee
Act (NREGA), assures 100 days of paid
work per year for the rural unemployed.
NREGA is one of the most ambitious
social safety net programmes in the
developing world. This new variant of
traditional public works schemes is

acquiring attention at a time of growing

underemployment amidst prosperity.
Providing financial services to the poor can
help generate income and also encourage
saving. Offering loans, credit, and different
types of insurance gives the poor greater
choice, and potentially greater opportunity.
Moreover, development areas are often
combined to maximize impact, for instance,
education plus health (school health clinics),
education plus food and nutrition (school
feeding programmes), and employment plus
food (food for work programmes). These
interventions by providing multiple
incentives, often positively alter behavior.
There is evidence, for instance, of greater
school attendance when meals are provided.
Some schools are also providing free basic
health services, which combined with
improved nutrition help ensure more
productive and healthier lives.
The test of a well-designed safety net
prog ramme is its ability to achieve
objectives within the broad parameters of
the given institutional framework. While
institutional reforms at the macro level may
be desirable, safety net programmes should
not be held hostage to these wider
governance reforms.

Enhancing Governance for Reducing

Inequality
Reducing both economic and social
inequality requires reasonably effective
institutions. If public sector institutions are
impotent, gover nment efforts can be
stymied. In principle, decentralization,
depending on the pace and sequence of the
refor m process, potentially allows for
more informed policymaking through
(a) improving the organization of the intergovernmental system; (b) strengthening

10

local and intergovernmental fiscal and

financial structures; and (c) developing the
functional and accountability systems that
make local gover nments work better.
Although, a well formed institutional setup would help in achieving development
outcomes, many countries are still able to
achieve useful results without a fully
functional institutional arrangement.
The recent example of Brazil is illustrative of how specific policies can reduce
inequality. Strategic governance is carried
out by focusing on a few institutions crucial
for results. Moreover, development of a
society crucially relies on the political will
of its leaders. When the intention to use
political power to reduce inequality is
strong, institutions become responsive.
Conversely, in the absence of political
motivation to achieve development
outcomes, no amount of governance
reform will help.

Improving Rural Productivity

Over 60 percent of the poor in Asian
countries are engaged in rural economic
activities. They require support through
public and private investments in rural
infrastructure, services, health and education. Increasing the productive power of the
poor through investments in social and
human capital directly helps their
contribution to the growth of the economy.
In rural areas, the focus must be on raising
productivity of small far ms and on
promoting off-farm employment opportunities. Indonesias pro-poor growth from
1967 to 1996 is widely believed to have
raised labour productivity, investment in
irrigation and rural infrastructure, and
stabilized food prices. The off-farm sector
can play an important role, not only in

Social Justice and Inequality in Asia

bridging rural and urban economies, but

also in the overall development of the rural
sector through employment and creation of
improved infrastructure.The emergence of
town and village enterprises in China
during the 1980s helped spark non-farm
economic activity in a rural setting. More
recently, provision of financial services in
rural and per i-urban are encouraging
economic entrepreneurship and activity
that is increasing the rural contribution to
national growth.

Involving International Institutions in

Reducing Inequality
Globalization has yielded enor mous
benefits for many Asian countries. However,
not all countries in Asia have benefited
equally, in fact some have lagged in this era
otherwise characterized by Asian dominance. Two transmission channels can be
identified that cause increases in inequality.
Globalized economic structures tend to
increase inequality, through implicit
preference for coastal areas as well as high
skilled jobs. First, increased significance of
coastal cities of commerce and trade has
resulted in a greater concentration of
incomes in urban and coastal areas. Second,
the fragmented nature of global production
has created high wage opportunities for the
relatively skilled in developing countries.
The downside has been an increase in wage
differentials between those engaged in
international activity and those working in
local markets. Outsourcing of jobs can
potentially have the effect of increasing
inequality in both the developed and
recipient country: through greater
unemployment in the high-wage country,
and through encouraging a greater wage
differential in the low-wage country.

Social Justice and Inequality

This is not an argument against

economic integration per se, but a call for
appreciating its potentially adverse impact
on national and international equality levels.
Markets have no inherent mechanism to
rectify resulting social injustices. This is
where international agencies must intervene and support governments.The neglect
of serious policy attention is surprising in
light of the rhetoric. It is time to redress this
imbalance and move forward to a future
where aid agencies prioritize social justice
as a central plank of their development
concerns. Greater coordination at the
regional and global levels, combined with
greater knowledge of local circumstances
and issues, is likely help international
institutions to better comprehend, and thus
also address inequality.

Concluding Thoughts
Development policies need to ensure that
economic losses are not socialized, while
benefits are privatized.The focus should be
on creating the conditions to realize a more
inclusive growth trajectory. In this sense, the
primary contribution of this volume is in
enriching the public policy debate. All

11

eight chapters that follow emphasize

the role of public policy in reducing
inequality by altering prevailing patterns
of growth.
A key economic indicator for equitable
outcome is the degree to which the lower
half of the income distribution contributes
towards overall growth. The greater the
contribution of the poor in the development process, the more likely that the
benefits will be distributed more evenly.
However, the poor are not poor or marginalized out of choice, but rather due to the
lack of choice and opportunity. In the face
of persistent and deeply entrenched social
inequalities, achieving equitable outcomes
requires first creating a level playing field.
Greater attention must be given to eliminating historical injustices that have existed
between people on the basis of caste, creed
and gender.
By exposing the multi-dimensional
nature of inequality and ways to address it
through public policy, we hope the reader
finds the present volume a useful first step
towards developing a more nuanced, yet
practical and achievable vision for inclusive
development.

End Notes
1. World Bank, The East Asia Miracle: Economic Growth and Public Policy, Oxford University Press, 1993.
2. Nobel Laureate Simon Kuznets predicted that economic inequality increases during the initial phase of
development, and decreases once a critical average income is attained. This famously became known as the
Kuznets Hypothesis. It is graphically depicted as the inverted U-shaped curve with inequality on the y-axis and
income per capita on the x-axis. Economic Growth and Income Inequality, 1955, AER; Quantitative Aspects
of the Economic Growth of Nations, 1963, Econ Dev & Cultural Change.
3. FAO 2009.
4. FAO Statistics 2009.
5. Measuring impact of initiatives is a developing science and practitioners are paying closer attention to
effectiveness of programmes through careful evaluations. As evaluative techniques are improved, policymakers
should expect more informed policy in the years to come. As part of an effort to make aid and development
more effective, multi-lateral development institutions, including UN development agencies and the Bretton Woods

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Social Justice and Inequality in Asia

institutions, are focusing on project-level evaluations. Development centres at leading universities including
Harvard, MIT and Oxford have set up specific initiatives to better evaluate development projects. Much of the
work is still in its early stage, but holds enormous promise in terms of future policy design and programming to
achieve development goals.
6. Richard Jolly, Frances Stewart and Andrea Cornia edited a two volume seminal critique of adjustment
programmes, Adjustment with a Human Face Vol. I: Protecting the Vulnerable and Promoting Growth, edited by
Giovanni Andrea Cornia, Richard Jolly, Frances Stewart; Clarendon Press, 1987 and Adjustment with a Human
Face Vol. II: Ten Country Case Studies, edited by Giovanni Andrea Cornia, Richard Jolly, Frances Stewart.
7. Timor-Leste is an exception; such a historical analysis is not possible due to recent independence. However,
pre-independence patterns of development reflect features frequently found in regions that are peripheral to a
large economy. Such was the case of East Timor within Indonesia.