Question

Is economic growth the cause of global income per capita inequality? Explain this by referring to the East Asian Miracle countries as example.

Answer 1

East Asian Miracle countries are respectively Japan, South Korea, Indonesia, Taiwan, Hong Kong, Thailand, Malaysia, and Singapore. Singapore ranks in the top 10 in terms of per capita income followed by rest of the countries.

Thus even though most of these countries have grown tremendously, each countries per capita income is different. Thus one can conclude that economic growth is not the cause of global income per capita inequality as infact the per capita equality has increased globally because of the tremendous growth rate witnessed in these countries and it has helped bridge the gap between European and Asian countries per capita income in dollar terms as Asian countries were lacking far behind before they witnessed economic growth rates.

In terms of comparison between the east asian countries, the higher the economic growth, lower is the per capita income as there is more investment in infrastructure and development required, which increases the per capita income after certain years when the economic growth starts to stabilise. Thus economic growth infact increases the per capita equality. For example in the case of Singapore, it is growing at a much steady pace than Indonesia, but Singapore's per capita income is higher, thus when Indonesia starts to develop further and when its growth rate stabilises, the per capita income will also increase.