Abstract
It is mostly believed that the trade openness creates a competitive environment resulting in economic growth. But, trade often produces losers as well as winners. According to the theoretical framework, trade liberalization is associated with narrowing or widening income disparities within countries. Empirical studies both support and oppose trade openness. Studies can be divided into two categories. In this study, we underline the link between foreign trade and income inequality in developed and developing countries by such these explanatory variables. For this purpose we use panel data to investigate the trade’s impact on levels and distribution of income.
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Notes
- 1.
Income inequality is measured by the Gini coefficient (GINI), which ranges from 0, when the income distribution is perfectly equalitarian to 1, representing the highest level of inequality. This index is not necessarily the best and the latest measure available for such an analysis; nonetheless, both the set of countries included in our sample are the widespread use of GINI in literature, have strongly influenced the choice of this measure with respect to others.
- 2.
Fast growing countries selected are; Argentina, Bulgaria, China, Czech Republic, Estonia, France, Latvia, Poland, Portugal, Romania, Russia, Singapore, Slovak Republic, Ukraine.
- 3.
Low growing countries selected are; Austria, Belgium, Bolivia, Brazil, Canada, Costa Rica, Denmark, Ecuador, El Salvador, Finland, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, Netherlands, Norway, Spain, Sweden, Switzerland, Turkey, United Kingdom.
- 4.
Resources for Gini coefficients: http://www.wider.unu.edu/, http://data.worldbank.org/, http://www.indexmundi.com/, Sarangi and Panda 2008.
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Yenipazarli, A., Kucukkaya, H. (2016). Does the Impact of Trade Openness on Income and Income Inequality Differ in Developed and Developing Countries?. In: Bilgin, M., Danis, H. (eds) Entrepreneurship, Business and Economics - Vol. 2. Eurasian Studies in Business and Economics, vol 3/2. Springer, Cham. https://doi.org/10.1007/978-3-319-27573-4_32
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