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How Can Globalization Affect Income Distribution? Evidence from Developing Countries

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  • Hajer Kratou
  • Mohamed Goaied
Abstract
The standard Hecksher-Ohlin-Samuelson framework claimed that foreign trade benefits developing countries, but many empirical studies suggest otherwise. After analyzing data on income deciles from the World Income Distribution Database for 66 developing countries, we found that trade openness benefits underprivileged people in affluent countries but not in developing countries. Also, external financial flows and democracy in conjunction do not exert significant effects, suggesting that these variables might affect income distribution through different channels. Finally, we reinforce the Kuznets inverted-U hypothesis; namely, the presence of an economic development threshold beyond which low-income deciles would increase.

Suggested Citation

  • Hajer Kratou & Mohamed Goaied, 2016. "How Can Globalization Affect Income Distribution? Evidence from Developing Countries," The International Trade Journal, Taylor & Francis Journals, vol. 30(2), pages 132-158, March.
    • Handle: RePEc:taf:uitjxx:v:30:y:2016:i:2:p:132-158
    DOI: 10.1080/08853908.2016.1139480
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    References listed on IDEAS

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    3. Onur Özdemir, 2020. "The handicap for enhanced solidarity across advanced economies: The greater the economic openness higher the unequal distribution of income," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 91(4), pages 585-632, December.
    4. Mohammad Sohail Yunis & Laila Durrani & Amad Khan, 2017. "Corporate Social Responsibility (CSR) in Pakistan: A Critique of the Literature and Future Research Agenda," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 9(1), pages 65-88, March.
    5. Huang, Kaixing & Yan, Wenshou & Sim, Nicholas & Guo, Yuqing & Xie, Fang, 2022. "Can trade explain the rising trends in income inequality? Insights from 40 years of empirical studies," Economic Modelling, Elsevier, vol. 107(C).

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