Incrementalism and Structural Change: A Technical Note

Syed Nawab Haider Naqvi, Asghar Qadir

Abstract


In the pursuit of social justice, the problem of relative
economic inequality in developing countries deserves serious
consideration. With the help of a formal analytical framework, the
present paper shows that the essential elements of a solution of the
problem are structural change, focusing on narrowing down the difference
in initial wealth holdings, and an active 'incrementalist' policy of
keeping the growth rate of the income of the poor significantly higher
than the growth rate of the income of the rich. Naive egalitarianism,
requiring only the equality of these two growth rates in the name of
moderation, will only create an explosive situation in which economic
inequality will keep on increasing. It is further argued that in the
context of solving the problem the critical points are the ones where
the income and wealth gaps begin to narrow down. Once these points are
reached, relative inequality will be finally eliminated in a fairly
short time regardless of the relative size of the initial wealth
holdings. Policy action to achieve the stated objective will require a
marriage of structural change and incrementalism rather than an emphasis
on one to the neglect of the other.

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DOI: https://doi.org/10.30541/v24i2pp.87-102

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