Inequality in the Third World: An Assessment of Competing Explanations

The purpose of this article is to assess the relative power of developmental, neo-Marxist, and statist explanations of inequalities in the Third World. This assessment is accomplished through the analysis of cross-sectional and short-term longitudinal data as well as several brief case studies. The cross-sectional analyses tend to suggest that, over the long run, both economic development and dependence on foreign investment generate tendencies toward increased income inequalities. The short-term longitudinal analyses, however, fail to support either of these views. Instead, they suggest that short-run changes are best explained by the nature and policies of the state in question. Authoritarian-exclusionary regimes tend to worsen inequalities over the short run, while more democratic states tend to stabilize them. We conclude that this is precisely what we should expect, given that development and dependency theories are not about what happens in the short run, but about what happens over long spans of time. We thus view as inappropriate the use of such theories to explain short-term changes in inequality in the Third World and call for more attention to the role of policy and politics as determinants of such changes.