Regional Inequality Compared: The Cases of India and Brazil

Abstract

In large countries like India and Brazil, differences between regions in wages, incomes, and productivity are an important component of overall inequality. At any point in time, such regional inequality may reflect diversity in terms of natural resources, capital accumulation and production systems, social structures, and urbanisation. However, many of these differences are constructed historically. In other words, they are a part of the growth regime of the country as a whole, the set of economic and social institutions which underlie the pace and pattern of economic growth, and the distribution of its benefits.

A comparison between two countries can help explore the nature and importance of regional inequality and identify some issues that are common, distinguishing them from others that are specific to one of the countries. This article therefore compares the current pattern of regional inequality in Brazil and India, and its dynamics over the last 30 years.

In order to make this comparison, it is necessary to use a broadly comparable regional model. In Brazil, regional analysis is generally based on a breakdown of the country into five large, distinctive regions. In India, there is no such tradition, since regional analysis tends to use states as units. Thus, for comparability with Brazil, this article aggregates states into a five-region breakdown which reflects patterns of output and expenditure per capita, poverty, and urbanisation.

The introduction to the article reviews some of the key features of the literature on regional inequality in low- and middle-income countries. The article then compares regional differences in the two countries with respect to a number of Key indicators, and how these differences have changed over time. The pattern of regional inequality is quite similar in the two countries, but the dynamics are quite different, with equalization in Brazil and increasing disparities in India. These differences in regional dynamics can be traced to differences in the growth regimes in the two countries.