Trade Openness and Cross‐country Income Differences

Hepenstrick, Christian; Tarasov, Alexander

doi:10.1111/roie.12168

Cited by 8 publications

(9 citation statements)

References 44 publications

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“…They found that trade, remittances, interest rate and urbanization increases income inequality, while FDI reduces inequality. Hepenstrick and Tarasov (2015) investigated how variations in trade openness contribute to cross-country income differences. The study calibrated the model for the year 2003 for 86 countries by using OLS and the Poisson pseudo maximum likelihood.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The literature on globalization (as international trade) and income inequality is divided into two strands. The first strand advocated that due to increase in trade globalization there is an increase in income inequality (Rudra, 2004; Silva and Leichenko, 2004; Felbermayr, 2005; Beckfield, 2006; Ali and Isse, 2007; Meschi and Vivarelli, 2009; Bensidoun et al , 2011; Lu and Cai, 2011; Cassette et al , 2012; Demir et al , 2012; Rodriguez-Pose, 2012; Munir et al , 2013; Hepenstrick and Tarasov, 2015, Munir and Sultan, 2017). The second strand argued that due to increase in trade globalization, there is a decrease in income inequality (Chakrabarti, 2000; Silva, 2007; Babones and Zhang, 2008; Tian et al , 2008; Georgantopoulos and Tsamis, 2011).…”

Section: Introductionmentioning

confidence: 99%

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Impact of globalization on income inequality in Asian emerging economies

Munir

Bukhari

2019

IJSSP

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Purpose The purpose of this paper is to examine the impact of three modes of globalization, i.e. trade globalization, financial globalization and technological globalization, separately on income inequality on the Asian emerging economies. Design/methodology/approach The study uses Hecksher–Ohlin and the Stolper–Samuelson theorem as a theoretical model for the relationship between globalization and income inequality. The study uses pooled least square (POLS) and instrumental variable least square (IVLS) estimation technique but prefers the IVLS over POLS due to the problems of omitted variable biased and endogeneity. Due to unavailability of data for all the Asian emerging economies, the study uses the following 11 countries, i.e. Bangladesh, China, India, Indonesia, Malaysia, Pakistan, Philippines, Sri Lanka, Singapore, South Korea and Thailand, from 1980 to 2014 for the trade and technological globalization model and from 1990 to 2014 for the financial globalization model. Findings Trade globalization significantly contributes to reduce income inequality in the Asian emerging economies. The impact of financial globalization on income inequality suggests that financial integration causes an increase in income inequality. Therefore, the benefits of financial globalization are not evenly distributed among the rich and the poor. The impact of technological globalization significantly contributes in the reduction of income inequality. Practical implications Government has to invest in research and development activities, establish efficient financial system, reduce trade restrictions and provide subsidies that help to increase the volume of trade. Originality/value This study contributes in the existing literature by analyzing the impact of trade globalization, financial globalization and technological globalization on income inequality in Asian emerging economies. The study provides useful guidelines to policy makers and governments to make effective policies in relation to globalization and income inequality that lead toward economic growth and reducing income inequality.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Impact of globalization on income inequality in Asian emerging economies

Munir

Bukhari

2019

IJSSP

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“…Rodríguez-Pose (2012) researched that rising economic globalization has a beneficial effect on global disparities, and trade contracts had a more substantial influence on income disparity in middle and low-income economies than high-income countries. Hepenstrick and Tarasov (2015) explored how fluctuations in trade openness lead to income gaps across the world. The study found that there would be no disparity owing to trade openness if the states were utterly symmetric.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The causative impacts of globalization on income inequality are a major issue of academic concern. Ali and Isse (2007); Aradhyula, Rahman, and Seenivasan (2007); Beckfield (2006); Bensidoun, Jean, and Sztulman (2011); Cassette, Fleury, and Petit (2012); Demir, Ju, and Zhou (2012); Felbermayr (2005); Hepenstrick and Tarasov (2015); Kai and Hamori (2009;Lu and Cai (2011); Meschi and Vivarelli (2009); Munira, Kianib, Khanc, and Jamald (2012); Rodríguez-Pose (2012); Rudra (2004); Silva & Leichenko, 2004;Wagle (2007) , etc. claim that globalization is rising income inequality in various regions at different periods. Stiglitz (2002) argued that globalization has negative consequences on, especially weak economies.…”

Section: Introductionmentioning

confidence: 99%

Bangladesh: Income Inequality and Globalization

Uddin

Iiuc²

2020

Asian bus. rev.

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Global anxiety about the effect of globalization is increasing. Throughout recent years the influence of globalization on income allocation has been fiercely discussed. This research carries out a time series review to examine the effect of globalization on income inequality in Bangladesh between 1975 and 2018. Study results indicate that globalization variables -exports, imports, foreign aid, foreign direct investment (FDI), and remittance inflows -have a significant long-term impact on income inequality in Bangladesh. Long-term foreign aid and imports are improving, while exports, FDI, and remittance inflows are deteriorating income distribution in Bangladesh during the study period. Nevertheless, in the short term, exports, imports, FDI have little to no impact in the model and a change in foreign aid and remittances will have a significant conservative force attempting to resolve the system.

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“…Major portion of the literature identified that higher trade openness increases inequality in the country for example but not limited to (Revenga, 1997;Milner and Wright, 1998;Levinsohn, 1999;Ravallion, 2001;Epifani, 2003;Lundberg and Squire, 2003;Melitz, 2003;Xu, 2003;Khondker and Raihan, 2004;Annabi et al, 2005;Milanovic, 2005;Yeaple, 2005;Bustos, 2007;Conte and Vivarelli, 2007;Meschi and Vivarelli, 2009;Barua and Chakraborty, 2010;Bergh and Nilsson, 2010;Li and Coxhead, 2011;Ezcurra and Rodriguezpose, 2013;Furusawa and Konishi, 2013;Grossman and Helpman, 2014).On the other hand, some studies concluded that trade reduces income inequality (Bourguignon and Morrisson, 1990;Wood, 1995;Calderón and Chong, 2001;Cornia and Kiiski, 2001;Ravallion, 2001;Lundberg and Squire, 2003;Wade, 2004;Milanovic and Squire, 2005;Easterly, 2006;Demir et al, 2012) and some studies found mixed results (Meschi and Vivarelli, 2009;Nissanke and Thorbecke, 2010;Castilho et al, 2012;Perera et al, 2014;Hepenstrick and Tarasov, 2015).…”

Section: Review Of Literaturementioning

confidence: 99%

Trading for SDGs: Trade Liberalization and Human Development in the Emerging Economies

Islam¹,

Fatema²

2017

Asian Development Policy Review

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Article History JEL Classification O50; F63; F14. This study examines the effect of trade liberalization on human development which is the core focus of sustainable development goals (SDGs). It uses trade openness as proxy to trade liberalization and human development index (HDI) as well as its three subindexes namely education, health, and income as indicators of human development. The study focuses on emerging economies as the research sample considering their significance in the world trade and deals with a panel data set of 43 emerging countries for the period of 1995-2014. Due to cross-sectional dependence in the data set DriscollKraay estimator has been applied to the regression models. The effect of trade openness on HDI and its three sub-indexes is identified for all the emerging economies and their three subgroups such as EAGLE, NEST and other emerging countries separately for the robustness of the analysis. The results of the study suggest that higher trade openness significantly progresses human development status in the emerging economies in all aspects. Both human capital accumulation and per capita GDP have a positive impact on human development whereas the effect of GDP growth is negative. The religious and cultural factors show a mixed effect on human development in the emerging economies.

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Trade Openness and Cross‐country Income Differences

Cited by 8 publications

References 44 publications

Impact of globalization on income inequality in Asian emerging economies

Impact of globalization on income inequality in Asian emerging economies

Bangladesh: Income Inequality and Globalization

Trading for SDGs: Trade Liberalization and Human Development in the Emerging Economies

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