Trade and Regional Inequality

This paper examines the relationship between openness and within-country regional inequality across 28 countries over the period 1975-2005, paying special attention to whether increases in global trade affect the developed and developing world differently. Using a combination of static and dynamic panel data analysis, we find that while increases in trade per se do not lead to greater territorial polarization, in combination with certain country-specific conditions, trade has a positive and significant association with regional inequality. In particular, states with higher inter-regional differences in sector endowments, a lower share of government expenditure, and a combination of high internal transaction costs with a higher degree of coincidence between the regional income distribution and regional foreign market access positions have experienced the greatest rise in territorial inequality when exposed to greater trade flows. This means that changes in trade regimes have had a more polarizing effect in low and middle-income countries, whose structural features tend to potentiate the trade effect and whose levels of internal spatial inequality are, on average, significantly higher than in high-income countries.

Bibliographic Details

Main Author:	Rodríguez-Pose, Andrés
Format:	Policy Research Working Paper biblioteca
Language:	English
Published:	2010-06-01
Subjects:	AGRICULTURE, BARRIER, BOND, BORDER REGIONS, CENTRAL PLANNING, CHANGES IN TRADE, COMPARATIVE ADVANTAGE, COMPARATIVE ADVANTAGES, COMPARATIVE ECONOMICS, COMPETITIVENESS, COUNTRY DUMMIES, COUNTRY FIXED EFFECTS, CUSTOMS, DATA AVAILABILITY, DEVELOPED COUNTRIES, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPMENT ECONOMICS, DIMINISHING RETURNS, DISTRIBUTION OF INCOME, DYNAMIC ANALYSIS, DYNAMIC ECONOMIES, ECONOMETRIC ANALYSIS, ECONOMETRICS, ECONOMIC DEVELOPMENT, ECONOMIC GEOGRAPHY, ECONOMIC GROWTH, ECONOMIC INTEGRATION, ECONOMIC REFORM, ENTRY POINTS, EQUILIBRIUM, EXPORT MARKET, EXPORTS, EXTERNAL TRADE, EXTERNALITIES, FOREIGN DIRECT INVESTMENT, FOREIGN MARKET, FOREIGN MARKETS, FOREIGN TRADE, GDP, GDP PER CAPITA, GINI COEFFICIENT, GLOBAL INTEGRATION, GLOBAL MARKET, GLOBAL TRADE, GLOBALIZATION, GOVERNMENT INTERVENTION, GROWTH POLICIES, HUMAN CAPITAL, IMPACT OF TRADE, IMPACT OF TRADE LIBERALIZATION, IMPORT COMPETITION, IMPORTS, INCOME, INCOME DISTRIBUTION, INCOME GROUP, INCOME INEQUALITY, INDUSTRIAL COUNTRIES, INEQUALITY MEASURES, INSTITUTIONAL CAPACITY, INTERNATIONAL MARKET, INTERNATIONAL ORGANIZATIONS, INTERNATIONAL TRADE, LAGGING REGIONS, MACROECONOMIC POLICIES, MARKET INTEGRATION, MIDDLE INCOME COUNTRIES, MIDDLE INCOME COUNTRY, MIDDLE-INCOME COUNTRIES, NATIONAL DEVELOPMENT, OPENNESS, PARTICULAR COUNTRY, POOR MARKET ACCESS, POOR REGIONS, POORER REGIONS, POST-REFORM, POVERTY REDUCTION, POWER PARITIES, PROSPEROUS REGIONS, PUBLIC POLICIES, PURCHASING POWER, REAL GDP, REAL INCOME, REGIONAL CONVERGENCE, REGIONAL DATA, REGIONAL DIFFERENCES, REGIONAL DISPARITIES, REGIONAL GROWTH, REGIONAL GROWTH RATES, REGIONAL INCOME, REGIONAL INEQUALITIES, REGIONAL INEQUALITY, REGIONAL LABOR, REGIONAL MARKET, REGIONAL PERFORMANCE, REGIONAL POLICY, REGIONAL POPULATION, REGIONAL SCIENCE, REGIONAL TRANSPORT, REGIONAL VARIATION, RENT SEEKING, RETAIL TRADE, SPATIAL DIMENSION, SPATIAL DISTRIBUTION, SPATIAL IMPACT, SPATIAL INEQUALITIES, SPATIAL INEQUALITY, SPATIAL PATTERNS, SPATIAL STRUCTURE, SPECIALIZATION, STATIC ANALYSIS, THIRD WORLD, TRADE EFFECT, TRADE FLOWS, TRADE LIBERALIZATION, TRADE MORE, TRADE OPENNESS, TRADE PATTERNS, TRADE POLICIES, TRADE POLICY, TRADE REGIMES, TRADE ROUTES, TRANSACTION COSTS, TRANSITION ECONOMY, TRANSPORT COSTS, WORKER MOBILITY, WORLD DEVELOPMENT INDICATORS, WORLD ECONOMY,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100624092218 http://hdl.handle.net/10986/3833
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