In an interview on Economic Development

Tell me about your fourth book, H B Chenery’s Redistribution with Growth.

This is actually edited by a group of people – one of the major editors is Chenery who used to be the vice-president of the World Bank and also a major development economist. It grew out of a conference that took place in the 1970s in Bellagio, Italy. It represented a major new direction in developmental economics, which was already happening but this was a landmark. There was this new focus of developmental economics into issues like poverty eradication and income and wealth inequality, and the conference participants looked into the question of how to have equity along with growth. 

Quite often growth increases inequality as we see in China and India today. This book was about trying to understand how, while there are processes inherent in economic growth which lead to more inequality, one can achieve growth as well as better equality. That is why it is called Redistribution with Growth. And this is something which is very important in economics. Much of mainstream economics posits a trade-off between equity and efficiency. If you want more equity you have to give up on efficiency. 

So this new approach didn’t deny that there is often a trade-off but it tries to look into certain patterns of economic growth which improve equality. For example, if types of development policy improve the access of poor people to education, better health and better access to credit, this will improve growth as well as improving the conditions of the poor. Land reform is another example. If you reduce the inequality of the land distribution this will give an incentive for production to a lot of poor peasants. I was quite young at that time but I participated in the conference out of which this volume grew and I have a short piece in the book.