DOES INTERNATIONAL TRADE EFFECT INCOME INEQUALITY?: EVIDENCE FOR G-7 COUNTRIES

Year 2022, Beykoz Akademi Dergisi 2022 Özel Sayı, 69 - 75, 01.05.2022

Ferda Nakıpoğlu Özsoy Aslı Özpolat

Abstract

It has been widely accepted that international trade contributes significantly to increasing the size of the market, domestic production, productivity, and ultimately economic growth. However, as the volume of international trade has increased significantly, income inequality has long been a topic in economics that has attracted the attention of economists. It appears that there is no consensus on the effect of international trade on income inequality in the literature. While some studies suggest that the increasing volume of international trade contributes to narrow the income gap in countries, some studies argue that international trade negatively affects the income distribution or the effect of trade on the income gap is not clear. Accordingly, the study investigated the relationship between exports, imports, economic growth, foreign direct investments, and income inequality in terms of G-7 countries in the 2003-2019 period. As a result of the findings of the FMOLS estimator, there is a close relationship between income inequality and international trade. For selected developed countries, increasing exports and imports further increase the income gap, while economic growth and foreign direct investments reduce income inequality.

Keywords

FMOLS estimator, G-7 Countries, International Trade

ULUSLARARASI TİCARET GELİR EŞİTSİZLİĞİNİ ETKİLİYOR MU?: G-7 ÜLKELERİ İÇİN SONUÇLAR

Abstract

Uluslararası ticaretin pazarın büyüklüğünü, yerli üretimi, üretkenliği artırdığı ve nihayetinde ekonomik büyümeye önemli ölçüde katkıda bulunduğu yaygın olarak kabul edilmektedir. Ancak, uluslararası ticaret hacmi önemli ölçüde arttığında, gelir eşitsizliği ekonomi alanında uzun süredir ilgi konusu olmuştur. Literatürde uluslararası ticaretin gelir eşitsizliği üzerindeki etkisi konusunda bir fikir birliği olmadığı görülmektedir. Bazı çalışmalar artan uluslararası ticaret hacminin ülkelerdeki gelir açığını kapatmaya katkıda bulunduğunu öne sürerken, bazı çalışmalar uluslararası ticaretin gelir dağılımını olumsuz etkilediğini veya ticaretin gelir açığı üzerindeki etkisinin net olmadığını savunmaktadır. Buna göre çalışmada 2003-2019 döneminde G-7 ülkeleri açısından ihracat, ithalat, ekonomik büyüme, doğrudan yabancı yatırımlar ve gelir eşitsizliği arasındaki ilişki incelenmiştir. FMOLS tahmincisinin bulguları sonucunda gelir eşitsizliği ile uluslararası ticaret arasında yakın bir ilişki vardır. Seçilmiş gelişmiş ülkeler için, artan ihracat ve ithalat gelir açığını daha da artırırken, ekonomik büyüme ve doğrudan yabancı yatırımlar gelir eşitsizliğini azaltmaktadır.

Keywords

FMOLS tahmincisi, G-7 Ülkeleri, Uluslararası Ticaret

References

• Barusman, A. F., and Barusman, Y. S. (2017). The Impact of International Trade on Income Inequality in the United States Since 1970’s.
• Basu, P., and A. Guariglia. (2007). Foreign Direct Investment, Inequality, and Growth. Journal of Macroeconomics 29: 824–839.
• Beaton, M. K., Cebotari, A., and Komaromi, A. (2017). Revisiting the Link Between Trade, Growth, and Inequality: Lessons for Latin America and the Caribbean. International Monetary Fund. Choi, C. (2006). Does Foreign Direct Investment Affect Domestic Income Inequality, Applied Economics Letters 13: 811–814.
• Dumitrescu, E. and Hurlin, C. (2012). Testing for Granger Non-causality in Heterogeneous Panels. Economic Modelling. 29(4), 1450-1460.
• Ford, J. L. (1982). The Ricardian and Heckscherohlin Explanations of Trade: A General Proof of an Equivalance Theorem and Its Empirical Implications. Oxford Economic Papers, 34(1), 141-149.
• Ghose, A. K. (2004), Global Inequality and International Trade, Cambridge Journal of Economics, 28(2), 229-252.
• Gyimah-Brempong, K. (2002). Corruption, Economic Growth, and Income Inequality in Africa. Economics of Governance, 3(3), 183-209.
• Herzer, D., and Nunnenkamp, P. (2013). Inward and Outward FDI and Income Inequality: Evidence from Europe. Review of World Economics, 149(2), 395-422.
• Im, K., Pesaran, M. and Shin, Y. (2003). Testing for Unit Roots in Heterogeneous Panels. Journal of Econometrics, 115, 53-74.
• Jaumotte, F., Lall, S., and Papageorgiou, C. (2013). Rising Income Inequality: Technology, or Trade and Financial Globalization?. IMF Economic Review, 61(2), 271-309.
• Minabe, N. (1967). The Stolper-Samuelson Theorem, the Rybczynski Effect, and the Heckscher-Ohlin Theory of Trade Pattern and Factor Price Equalization: The Case of Many-Commodity, Many-Factor Country. The Canadian Journal of Economics and Political Science/Revue canadienne d'Economique et de Science politique, 33(3), 401-419.
• Pedroni, P., (2000), Fully Modified OLS for Heterogenous Cointegrated Panels, Nonstationary Panels, Panel Cointegration, and Dynamic Panels, 15, 93-130
• Pedroni, P., (2001). Purchasing Power Parity Tests in Cointegrated Panels. Rev. Econ. Stat. 83, 727–731.
• Roser, M., and Cuaresma, J. C. (2016). Why is Income Inequality Increasing in the Developed World?. Review of Income and Wealth, 62(1), 1-27.
• Rubin, A., and Segal, D. (2015). The Effects of Economic Growth on Income Inequality in the US. Journal of Macroeconomics, 45, 258-273.
• Stolper, W. F. and P. A. Samuelson. (1941), Protection and Real Wages, The Review of Economic Studies, 9(1), 58-73.
• Ucal, M., Haug, A. A., and Bilgin, M. H. (2016). Income Inequality and FDI: Evidence with Turkish Data. Applied Economics, 48(11), 1030-1045.
• Wang, M., Park, N., and Choi, C. H. (2020). The Nexus Between International Trade, FDI and Income Inequality. Journal of Korea Trade, 24(4), 18-33.
• Zhang, K. H. and X. Zhang (2009), How does Globalization Affect Regional Inequality Within A Developing Country? Evidence from China, Journal of Development Studies, 39(4), 47-67.