Income Inequality In Asia - Major Trends And Challenges

Income inequality in Asia is high and it is growing in recent years. Economic research shows that ever since the beginning of the 1990s, developing Asia achieved significant economic growth. It has reduced poverty faster than any other region of the world, but for many countries this was also a period of experienced rising income inequality. The main drivers for the speedy economic growth of the region were foreign direct investments along with technological change, globalization, and market-oriented deregulation. Yet, they also contributed to income disparities, especially in terms of prioritising skilled over unskilled workers, owners of capital over labor, and coastal urban areas with industrial clusters when compared to rural and agrarian inland regions. Additionally, the process was aggravated by in- stitutional weaknesses and the prevalence of extractive institutions, which were never reformed to pro- vide for a just distribution of opportunities and create a favourable business environment. In this paper we discuss the source of inequalities in Asia, their key drivers as well as the approaches needed to be implemented and good examples when trying to deal with high inequality levels in Asia.