Changing Income Inequality During Structural Transformation

Abstract

This chapter examines the mutual, two-way dependence of structural transformation and food security. It begins with a discussion of analytical perspectives and policy approaches since 1950, focusing on agricultural development and food price stability as the underlying foundations to both structural transformation and food security. It then considers structural transformation in historical perspective, the link between agricultural productivity and structural transformation, and policy challenges that arise along the path of structural transformation. In particular, it analyses the growing gap between labour productivity in rural and urban areas as rapid industrialization takes place, giving rise to widening rural–urban income gaps. The chapter also explains how Asian countries differ from their non-Asian counterparts in the pattern of agricultural employment change with respect to per capita incomes before assessing a market-oriented approach to economic growth and structural transformation, and a stabilization approach to policy initiatives that prevent sharp price increases in staple foods.