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This paper examines whether income inequalities among countries in Asia and the Pacific have increased or decreased in previous decades. By analysing the position of countries’ GDP per capita relative to that of a reference economy (Australia), the study finds that between 1970 and 2014, less affluent countries within the region were generally catching up in relative terms, allowing them to slowly move up the income matrix towards higher tier groups. Subregional examination shows that most of the income convergence in Asia-Pacific was due to exceptional economic growth in East and North-East Asia and, to a lesser extent, in South-East Asia. While the paper shows that relative income differences between countries have fallen in the region since the 1970s, it points to the need of differentiating between relative and absolute measures of inequality: Insufficient convergence and substantial initial differences in GDP per capita still meant that, despite a decline in relative inequality, absolute differences in average income grew during the same time).

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