A Human Capital Approach to Inequalities: The Case of the East Asian Miracle and India

The extraordinary growth and reduction in inequalities achieved between the mid-1960s and mid-1990s by the High Performing Asian Economies (HPAEs) — namely Hong Kong, the Republic of Korea, Singapore, Taiwan (collectively called “the four tigers”), Japan, China, Indonesia, Malaysia and Thailand — has been discussed at great length in the economic literature. However, no clear explanation has been suggested for the poor performance of other Asian economies, like India, which share the HPAEs geographical proximity and similar economic structures. This paper shows that the stark contrast between the high growth rates and declining income inequalities of HPAEs on one side, and low growth rates and stable (or rising) income inequalities of India and other Asian countries on the other side, may at least in part be explained by the different role that human capital has played in those economies between the mid-1960s and mid-1990s.