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Globalization and Income Inequality: A Panel Data Analysis of 68 Countries

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  • Atif, Syed Muhammad
  • Srivastav, Mudit
  • Sauytbekova, Moldir
  • Arachchige, Udeni Kathri

Abstract

The causal effect of globalisation on income inequality is an issue of significant academic interest. On the one hand globalisation is considered to promote global economic growth and social progress, while on the other; it is blamed for growing income inequality and environmental degradation, causing social degeneration and difficulty of competition. The objective of the study is to determine the direction of impact of globalization on income distribution. This study hypothesises that increased globalisation worsens income inequality, and vice versa. This hypothesis is investigated using panel data econometric techniques to examine income inequality index and the index of globalization for panel data of 68 developing countries over the period of 1990-2010. The analysis shows that an increase in globalisation (represented by an increase in the KOF coefficient) leads to an increase in the level of income inequality. It is worth noting, however, that this analysis also suffers from several limitations. It is possible perhaps a simple, overarching relationship does not exist. Rather it is possible that the impact of globalisation on income distribution varies between nations, depending on the structures and institutions that are in place in each country.

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  • Atif, Syed Muhammad & Srivastav, Mudit & Sauytbekova, Moldir & Arachchige, Udeni Kathri, 2012. "Globalization and Income Inequality: A Panel Data Analysis of 68 Countries," MPRA Paper 42385, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:42385
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    References listed on IDEAS

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    Cited by:

    1. Muhammad Haseeb & Tulus Suryanto & Nira Hariyatie Hartani & Kittisak Jermsittiparsert, 2020. "Nexus Between Globalization, Income Inequality and Human Development in Indonesian Economy: Evidence from Application of Partial and Multiple Wavelet Coherence," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 147(3), pages 723-745, February.
    2. Ioannis Gasteratos & Michael Karamalis & Andreas Koutoupis, 2016. "Shadow Economy Worsens Income distribution," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(3), pages 80-92.
    3. Jayanti Behera & Dukhabandhu Sahoo, 2022. "Asymmetric relationships between information and communication technology (ICT), globalization, and human development in India: evidence from non-linear ARDL analysis," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 11(1), pages 1-25, December.
    4. Adeel Ali & Syed Faizan Iftikhar & Ambreen Fatima & Lubna Naz, 2015. "Income Inequality, Redistribution of Income and Trade Openness," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 54(4), pages 865-874.
    5. Ali, Mohammad Afshar & Alam, Khorshed & Taylor, Brad & Rafiq, Shuddhasattwa, 2020. "Does ICT maturity catalyse economic development? Evidence from a panel data estimation approach in OECD countries," Economic Analysis and Policy, Elsevier, vol. 68(C), pages 163-174.
    6. Kopnova, Elena & Rodionova, Liliya, 2020. "Globalization and socio-economic development in Russia," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 60, pages 80-101.
    7. Mehmet Akif DESTEK, 2018. "Dimensions of globalization and income inequality in transition economies: taking into account cross-sectional dependence," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 9, pages 5-25, December.
    8. Uddin, Md. Nezum, 2020. "Bangladesh: Income Inequality and Globalization," Asian Business Review, Asian Business Consortium, vol. 10(1), pages 43-52.
    9. Munem Ahmad Chowdhury & Hafsa Rahman Nijhum & Kazi Mohammed Kamal Uddin, 2021. "Disintegrated Impact of Trade Openness on Income Inequality: Empirical Evidence from Bangladesh," Business and Economic Research, Macrothink Institute, vol. 11(3), pages 1-18, December.
    10. John C. Anyanwu, 2016. "Empirical Analysis of the Main Drivers of Income Inequality in Southern Africa," Annals of Economics and Finance, Society for AEF, vol. 17(2), pages 337-364, November.
    11. NWOSA Philip Ifeakachukwu, 2020. "Globalisation, Economic Growth and Income Inequality in Nigeria," Indian Journal of Human Development, , vol. 14(2), pages 202-212, August.

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    More about this item

    Keywords

    Globalization; Income Inequality; Panel Data;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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