Unemployment, Employment, and Development

Abstract How have economic development, employment, and labour markets in Asian countries interacted since the publication of Myrdal’s Asian Drama? Myrdal rejected, correctly, the Western approach to, and definition of, employment, but very much underestimated the effects of the Lewisian development process. Myrdal’s concept of cumulative causation better explains how fast-growing countries with better labour markets have developed, by pursuing a developmental state and applying interventionist policies in agriculture, industry, and macroeconomics, as well as in social policies and in strengthening the participation of women in the labour market. Successful countries are also characterized by initial low-income inequality and targeted redistribution of factors of production. However, growing income inequality together with other development challenges can pose problems in the future.