How Can Globalization Affect Income Distribution? Evidence from Developing Countries
TL;DR: The authors found that trade openness benefits underprivileged people in affluent countries but not in developing countries, suggesting that external financial flows and democracy in conjunction do not exert significant effects, and that these variables might affect income distribution through different channels.
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.
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01 Jan 2002
TL;DR: This article investigated whether income inequality affects subsequent growth in a cross-country sample for 1965-90, using the models of Barro (1997), Bleaney and Nishiyama (2002) and Sachs and Warner (1997) with negative results.
Abstract: We investigate whether income inequality affects subsequent growth in a cross-country sample for 1965-90, using the models of Barro (1997), Bleaney and Nishiyama (2002) and Sachs and Warner (1997), with negative results. We then investigate the evolution of income inequality over the same period and its correlation with growth. The dominating feature is inequality convergence across countries. This convergence has been significantly faster amongst developed countries. Growth does not appear to influence the evolution of inequality over time. Outline
3,770 citations
TL;DR: In this paper, the authors present a quantitative summary and analysis of existing estimates regarding the globalisation-inequality relationship, using a new data set consisting of 1,254 observations from 123 primary studies.
Abstract: A large volume of econometric literature has studied the impact of economic globalisation on income inequality around the world. However, reported econometric estimates vary substantially, which makes it difficult to draw valid conclusions. This paper presents a quantitative summary and analysis of existing estimates regarding the globalisation–inequality relationship. We use a new data set consisting of 1,254 observations from 123 primary studies. By applying meta‐analysis and meta‐regression methods, we obtain several main findings. First, globalisation has a (small‐to‐moderate) inequality‐increasing effect. Second, while the effect of trade globalisation is small, financial globalisation shows a more sizeable and significantly stronger inequality‐increasing impact. Third, we find an average inequality‐increasing impact of globalisation in both advanced and developing countries. Fourth, education and technology moderate the impact of globalisation on income inequality.
62 citations
30 Mar 2017
TL;DR: In this article, the authors systematically assessed the thematic and chronological contributions which include various methodological tools and suggested future research avenues in the context of Pakistan and concluded that the limited number of researches in Pakistan on CSR provides opportunity for further research in different theoretical perspectives and sectors.
Abstract: This paper critically captures an up-to-date picture of the empirical and theoretical contributions regarding CSR literature in Pakistan. This paper has systematically assessed the thematic and chronological contributions which include various methodological tools and suggested future research avenues in the context of Pakistan. The review indicates that companies often practice CSR as a short term, reactive tool based on philanthropic activities in the context of Pakistan. Moreover, the focus of most of CSR researches in Pakistan is towards child labour issues and leather and textile industry. Based on review of the literature, we establish that the currently popular methodological approach among researchers is either a micro-level case study approach or a macro-level exploratory approach. It is concluded, therefore, that the limited number of researches in Pakistan on CSR provides opportunity for further research in different theoretical perspectives and sectors. In addition to this, the scope of CSR in Pakistan can be extended towards a wide range of CSR issues including environment, stakeholders and corporate social disclosure. Moreover, it is suggested that more predictive, pragmatic and empirical research methodologies should be adopted in future
23 citations
TL;DR: The authors argue that to understand the relationship between globalization and poverty, we must ultimately understand the political motivations underlying the policies directed at the poorest, and identify the ideological positions of developing country governments, an identification that moves beyond the conventional left-right divide that prevails in developed nations.
Abstract: What is the relationship between globalization and poverty? Developing economies have long turned to international trade and finance as a solution for development, yet 35% of the world's population still lives below the international poverty line. Economists and political scientists explore this relationship but are far from reaching a conclusion. We review this literature and argue that to understand the relationship between globalization and poverty, we must ultimately understand the political motivations underlying the policies directed at the poorest. Specifically, we contend that scholars need to identify the ideological positions of developing country governments, an identification that moves beyond the conventional left–right divide that prevails in developed nations. We provide theoretical guidance on how scholars might begin to operationalize ideology on a global basis and why this is necessary to evaluate the globalization–poverty linkage. Further, we provide some preliminary quantitative and qu...
19 citations
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TL;DR: The process of industrialization engenders increasing income inequality as the labor force shifts from low-income agriculture to the high income sectors as mentioned in this paper, and on more advanced levels of development inequality starts decreasing and industrialized countries are again characterized by low inequality due to the smaller weight of agriculture in production and income generation.
Abstract: The process of industrialization engenders increasing income inequality as the labor force shifts from low-income agriculture to the high income sectors. On more advanced levels of development inequality starts decreasing and industrialized countries are again characterized by low inequality due to the smaller weight of agriculture in production (and income generation).
7,636 citations
TL;DR: A survey of the top three political science journals from 1998 to 2002 suggests that the execution of these models is often flawed and inferential errors are common as discussed by the authors, and that scholars follow the simple checklist of dos and don'ts for using multiplicative interaction models presented in this article.
Abstract: Multiplicative interaction models are common in the quantitative political science literature. This is so for good reason. Institutional arguments frequently imply that the relationship between political inputs and outcomes varies depending on the institutional context. Models of strategic interaction typically produce conditional hypotheses as well. Although conditional hypotheses are ubiquitous in political science and multiplicative interaction models have been found to capture their intuition quite well, a survey of the top three political science journals from 1998 to 2002 suggests that the execution of these models is often flawed and inferential errors are common. We believe that considerable progress in our understanding of the political world can occur if scholars follow the simple checklist of dos and don'ts for using multiplicative interaction models presented in this article. Only 10% of the articles in our survey followed the checklist.
5,235 citations
"How Can Globalization Affect Income..." refers methods in this paper
...Multiplicative interaction models were created in social science research to pay particular attention to institutional contexts in economics (Kam and Franzese (2003) and Brambor, Clark, and Golder (2006))....
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...In order to gauge the real effect of openness and external flows on the income shares of the poor, we used multiplicative interaction models (as recommended by Friedrich (1982) and Brambor, Clark, and Golder (2006)) between each conditional factor and external flows....
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01 Jan 1995
TL;DR: The World Trade Organization (WTO) was established by agreement of more than 120 economies, with almost all the rest eager to join as rapidly as possible as mentioned in this paper, and the agreement included a codification of basic principles governing trade in goods and services.
Abstract: WHEN T H E BROOKINGS Panel on Economic Activity began in 1970, the world economy roughly accorded with the idea of three distinct economic systems: a capitalist first world, a socialist second world, and a developing third world which aimed for a middle way between the first two. The third world was characterized not only by its low levels of per capita GDP, but also by a distinctive economic system that assigned the state sector the predominant role in industrialization, although not the monopoly on industrial ownership as in the socialist economies. The years between 1970 and 1995, and especially the last decade, have witnessed the most remarkable institutional harmonization and economic integration among nations in world history. While economic integration was increasing throughout the 1970s and 1980s, the extent of integration has come sharply into focus only since the collapse of communism in 1989. In 1995 one dominant global economic system is emerging. The common set of institutions is exemplified by the new World Trade Organization (WTO), which was established by agreement of more than 120 economies, with almost all the rest eager to join as rapidly as possible. Part of the new trade agreement involves a codification of basic principles governing trade in goods and services. Similarly, the International Monetary Fund (IMF) now boasts nearly universal membership, with member countries pledged to basic principles of currency convertibility. Most programs of economic reform now underway in the developing world and in the post-communist world have as their strategic aim the
4,840 citations
"How Can Globalization Affect Income..." refers background in this paper
...Similarly, Sachs et al. (1995) sustained the income convergence effect by comparing trade openness in developing countries with the income level in wealthy countries....
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01 Jan 2002
TL;DR: This article investigated whether income inequality affects subsequent growth in a cross-country sample for 1965-90, using the models of Barro (1997), Bleaney and Nishiyama (2002) and Sachs and Warner (1997) with negative results.
Abstract: We investigate whether income inequality affects subsequent growth in a cross-country sample for 1965-90, using the models of Barro (1997), Bleaney and Nishiyama (2002) and Sachs and Warner (1997), with negative results. We then investigate the evolution of income inequality over the same period and its correlation with growth. The dominating feature is inequality convergence across countries. This convergence has been significantly faster amongst developed countries. Growth does not appear to influence the evolution of inequality over time. Outline
3,770 citations
"How Can Globalization Affect Income..." refers background in this paper
...We control some other variables, such as the level of income per capita and its square term, which are included in order to check the Kuznets (1955) relationship....
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TL;DR: In this paper, a broad panel of countries showed little overall relation between income inequality and rates of growth and investment, while the Kuznets curve is a clear empirical regularity, but it does not explain the bulk of variations in inequality across countries or over time.
Abstract: Evidence from a broad panel of countries shows little overall relation between income inequality and rates of growth and investment. For growth, higher inequality tends to retard growth in poor countries and encourage growth in richer places. The Kuznets curve—whereby inequality first increases and later decreases during the process of economic development—emerges as a clear empirical regularity. However, this relation does not explain the bulk of variations in inequality across countries or over time.
2,672 citations
"How Can Globalization Affect Income..." refers methods in this paper
...A set of studies corroborate this idea, such as Lundberg and Squire (2003) and Barro (2000), using Gini coefficients to measure inequality, as well as trade to GDP ratios and adjusted trade to GDP ratios to measure openness, respectively....
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