Heterogeneity, trade integration and spatial inequality

This article examines the link between economic globalization and spatial inequality in a panel of 142 countries over the period 1992–2012. Our instrumental variables estimates reveal a strong causal effect of the degree of economic integration with the rest of the world on spatial inequality, indicating that the advances in the process of globalization currently underway contribute to significantly increasing regional income disparities. This means that globalization leads to the emergence of losing and winning regions within countries and that the group of losing (winning) regions tends to be made up of low (high-)-income regions. This result has to do with the regressive spatial impact of actual economic flows, while existing restrictions on trade and capital do not exert a significant effect in this context. Our findings are robust to the inclusion in the analysis of different covariates that may be correlated with both spatial inequality and globalization and are not driven by a specific group of influential countries. Likewise, the observed relationship between economic integration and spatial inequality does not depend on the measures used to quantify the magnitude of regional income disparities within the various countries. At the same time, our estimates suggest that the spatial impact of globalization is contingent on the level of economic development.

Bearing in mind that developing countries have less capital and less advanced technologies, this paper investigates the joint impact of two different kinds of first-nature forces, Ricardian comparative advantage and the Heckscher-Ohlin advantage, and the second-nature forces on economic activity and spatial income inequality. We extend a new economic geography model without a traditional sector so that the wage is endogenous in our framework. We find that, interacting with the second nature, the impact of the first nature related to technology and that related to capital endowment are unequal and nonuniform along with the integration process. Moreover, by combining these three kinds of trade causes, we generate various patterns of relationship between spatial income inequality and trade integration, providing a better explanation for the diverse empirical studies.

Trade integration and regional disparity in a model of scale-invariant growth

The sharp increase in wage inequality observed from the 1990s has stimulated a lively debate concerning the causes of this phenomenon. The inequality in question concerns the rise in the wage of skilled labour (typically college educated workers) relative to the wage of unskilled labour (workers without college education). A change in the skill premium may occur for various reasons but the fact that it occurred at a time of rising globalization makes international trade a prime suspect. In this chapter we study the possible links between trade integration and rising skill premium. All the main models that aim at explaining the skill premium are examined in depth. An important empirical result is that the skill premium has increased in skill abundant as well as in skill scarce countries: a fact that runs against the convergence of relative factor prices predicted by the standard Heckscher-Ohlin model.

Widening income inequality in recent years has triggered an outpouring analysis and reflection on the causes of inequality. Economic cooperation demonstrated robust economic growth, reducing poverty but also accompanied by rising inequality. The income gap persists between ASEAN-5 (Indonesia, Malaysia, the Philippines, Singapore, Thailand) and the ASEAN-3 (Cambodia, Laos, Vietnam) has become a prominent issue and policy debate. Hence, this study aims to investigate the relationship of regional economic integration and income inequality by adopting a balanced panel analysis for selected ASEAN countries from 2005 to 2018. Trade and financial integration was evaluated to investigate the influence on inequality. Empirical findings showed that trade integration is more effective than financial integration in improving income distribution. Export activities from the manufacturing and service sectors help ASEAN-5, while the agricultural and manufacturing sectors help ASEAN-3 in narrowing income distribution. Therefore, integration policies to improve inequality should not be universally implied on countries with diverse economics structures and varied development activities.

This paper examines the link between increased trade and regional GDP growth across the regional income distribution in Greece during the post-EMU period (2000–2013). By means of quantile regression techniques, panel fixed effects and system generalized method of moments (GMM), we disentangle the effects of EU trade—trading with generally richer countries—versus global trade—in the case of Greece, mostly trading with poorer countries—at several points of the regional income distribution to identify differences in trade elasticities. The analysis finds that the impact of EU trade is highly heterogeneous and mainly affects negatively the economy of the richer regions in Greece. In contrast, the effects of EU trade display insignificant results for the lower-income regions, attributed to the absence of direct substitution effects.

In this paper we present a theoretical framework for studying integration and inequality in China, followed by some empirical discussions of the Chinese regions. Employing the inframarginal methodology, we set up a theoretical framework based on transaction efficiency and comparative advantage in order to explain integration and inequality in developing economies. Our analyses imply that, among other findings, increases in domestic transaction efficiencies tend to reduce welfare inequalities in a developing economy while increases in international transaction efficiencies tend to raise the overall welfare level of a developing economy. These and other related results of this paper may have important implications for developing countries (China) in their policy-making.

This paper analyzes the income inequality effect of economic integration in ECOWAS by decomposing economic integration into two dimensions: trade and fiscal integration approximated respectively by trade intensity and fiscal convergence. For robustness purposes, we use different metrics for each dimension. We also consider the introduction in the region of the growth and convergence pact in the analysis of fiscal integration effect on income inequality. The analysis covers the period 1990–2018. For the empirical evidence, the generalized method of moment is used. The results obtained are robust and reveal that improving regional economic integration has a reducing effect on income inequality. Taken individually, trade integration and fiscal integration contribute to reducing income inequality. However, taken together, the reducing effect of economic integration on income inequality is more pronounced. Besides, the results indicate that fiscal integration has more contributed to the reduction of income inequality since the introduction of the first fiscal convergence pact in the region in 2000 than before. For reducing income inequality, our analysis recommends to ECOWAS countries to take steps to remove barriers to regional trade on the one hand, and on the other hand, to converge together on the fiscal front.

We study Hardy-type integral inequalities with remainder terms for smooth compactly-supported functions in convex domains of finite inner radius. New $ L_{1} $ - and $ L_{p} $ -inequalities are obtained with constants depending on the Lamb constant which is the first positive solution to the special equation for the Bessel function. In some particular cases the constants are sharp. We obtain one-dimensional inequalities and their multidimensional analogs. The weight functions in the spatial inequalities contain powers of the distance to the boundary of the domain. We also prove that some function depending on the Bessel function is monotone decreasing. This property is essentially used in the proof of the one-dimensional inequalities. The new inequalities extend those by Avkhadiev and Wirths for $ p=2 $ to the case of every $ p\geq 1 $ .