Welfare and Development in a Neo-Liberal World
In this essay, the author looks at the dynamics of development in an ever-changing global context. The global context here is the proliferation of global capital flows, which has led to increased economic integration among nations, indirectly resulting in increased inequality across nations, across social groups, and among individuals. While keeping in mind that correlation does not imply causation, the author recognizes the fact that the free market is not the only factor that has aided inequality. Within this understanding of rising inequality, the author addresses the need for government intervention in correcting market failures, by drawing heavily on existing literature on development and public economics. The author traces existing literature on the relationship between inequality and capital income while showing how an increase in the skill premium is also related to higher levels of inequality. Finally, the article outlines a few niche areas which require active policy interventions to better direct the flow of capital in order to aid long-term and sustained development practices.