In the second half of the last century, both India and China have undergone major transitions and have moved to more liberalized economies. This paper relates the observed patterns in regional inequality to major events during this period.

""Increased regional inequality has been a major concern in many emerging economies like China, India, Vietnam and Thailand. However, even a large inequality is observed within the lagging regions.

""This paper highlights the difference between secure investor property rights and loosely defined individual property rights. Globalization and fiscal decentralization have intensified this difference.

The dynamic rural nonfarm sector in China has been a major contributor to the country’s remarkable growth, while in India the growth in output and employment in this sector has been rather stagnant.

"A key objective of China's reform program was to reduce distortions in the economic system and enhance growth.

Since 1985, the Chinese government has given high priority to building roads, particularly high-quality roads that connect industrial centers.