Political economy of income distribution: A comparative study of Taiwan and Mexico

Both Taiwan and Mexico have experienced remarkable economic growth since the 1960s. Taiwan demonstrates that higher income level can be accompanied by falling income inequalities. However, unlike Taiwan, the course of economic growth in Mexico has left the country with a very unequal distribution of income. This paper compares the government policies of income distribution in Mexico and Taiwan and identifies the factors contributing to the success of Taiwan and to the highly uneven income distribution in Mexico. The paper concludes that market-oriented growth does nor automatically reduce inequality or poverty. The prospects for better income equity and sustainable economic development would be greatly enhanced through implementation of policies aimed at redistributing land and skills, facilitating small enterprises, and increasing domestic saving.