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Hierarchical Integration: The Dollar Economy and the Rupee Economy Anirudh Krishna Jan Nederveen Pieterse Abstract. While contemporary globalization makes the world more interconnected it is reworks and builds on existing cleavages and uneven development. This is an under-researched dimension of the emerging twenty-first century international division of labor. The core question is whether new developments (associated with exports, offshoring and outsourcing) spin off to the majority in the countryside and the urban poor. This paper examines the relationship between the dollar economy and the rupee economy in India. It documents the ways in which inequality is built into and sustains India’s development. The second section discusses other instances of multi-speed economies and analytics that seek to come to grips with these relations, from combined and uneven development to global value chains. This section presents three ways of capturing contemporary inequality: asymmetric inclusion, enlargement-and-containment and hierarchical integration, each of which captures different dimensions of inequality. Introduction An early notion in development studies, raised by the Dutch economist J. H. Boeke, is the ‘dual economy’ thesis of a split between a traditional and modern sector. This idea was one of the starting points of modernization theory and was taken up by Arthur Lewis and other scholars. The general implication was that development policy should focus on strengthening and expanding the modern part of the economy and the traditional sector would follow eventually. This was criticized in subsequent work. Dependency studies argued that rather than the economy being split, the modern sector was parasitical on the traditional sector and received subsidies in the form of cheap labor and agricultural goods from the traditional sector so the two economies were interdependent. Besides since the ‘traditional’ sector served as a reserve army of labor it kept wag