A new perspective on economic development and income inequality

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This paper shows that, based on Yang and Zhang's (2003) analysis, economic development can be viewed as an evolutionary process of division of labour that is driven by improvements in transaction efficiency. Both economic development and income inequality are consequences of this process; there is no systematic relationship between the two. Implications of the Yang-Zhang analysis for government policies, including the allocation of foreign aid, are also discussed.

Original languageEnglish
Pages (from-to)125-130
Number of pages6
JournalEconomic Papers
Issue number2
Publication statusPublished - Jun 2006


  • Economic development
  • Foreign aid
  • Income inequality

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