The authors propose a decomposition of differences in entire distributions of household incomes, which sheds new light on the powerful, and often conflicting, forces that underpin the changes in poverty and inequality that accompany the process of economic development. This approach is applied to three East Asian countries - Indonesia, Malaysia, and Taiwan, China - and to four Latin American countries - Argentina, Brazil, Colombia, and Mexico - in recent periods. The book is the outcome of a joint research project of the Inter-American Development Bank and the World Bank.