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The impact of trade openness on regional inequality : the cases of India and Brazil

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  • Marie Daumal

    (Université Paris 8 Vincennes-Saint-Denis, Université Paris-Dauphine, LEDa, UMR DIAL)

Abstract

Regional inequalities are large in India and Brazil and represent a development challenge. This paper aims to determine whether regional disparities are linked to countries’ trade openness. An annual indicator of regional inequalities is constructed for India over the period 1980-2003 and for Brazil over 1985-2003. Results from time series regressions show that Brazil’s trade openness contributes to the reduction in regional inequalities in Brazil. The opposite result is found for India. India’s trade openness is an important factor aggravating income inequality among Indian states. In both countries, the inflows of foreign direct investment are found to increase regional disparities. _________________________________ Dans les années 90, les inégalités régionales ont fortement augment´e en Inde. Les inégalités entre Etats brésiliens sont importantes et constituent un problème politique majeur pour la fédération brésilienne. En 1991, ces deux pays se sont progressivement ouverts au commerce international. L’objectif du papier est de déterminer s’il existe ou non un lien entre les inégalités régionales et l’ouverture commerciale dans les cas de l’Inde et du Brésil. J’ai construit un indicateur, l’index Gini, qui est une mesure des inégalités régionales, sur la période 1980-2004 pour l’Inde et sur la période 1985-2004 pour le Brésil. Cet indicateur des inégalités régionales est ensuite régressé sur divers déterminants dont l’ouverture commerciale des pays, en utilisant la technique des séries temporelles et des modèles vectoriels à correction d’erreur. Je trouve que l’ouverture commerciale de l’Inde a fortement aggravé les inégalités existant entre l’Inde du Nord, de plus en plus pauvre, et l’Inde du Sud de plus en plus riche. Or ces inégalités régionales croissantes sont maintenant une source de tension et de conflits au sein de la fédération indienne, les Etats du Sud ne voulant plus “payer” pour le Nord du pays. Au contraire, l’ouverture du Brésil semble avoir entraîné une diminution des inégalités entre Etats brésiliens.

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  • Marie Daumal, 2010. "The impact of trade openness on regional inequality : the cases of India and Brazil," Working Papers DT/2010/04, DIAL (Développement, Institutions et Mondialisation).
    • Handle: RePEc:dia:wpaper:dt201004
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    Cited by:

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    2. Maria Cecilia J. LUSTOSA & Yves-André FAURE, 2013. "Changements institutionnels et politiques publiques au Brésil\r\nAux sources de la réduction des inégalités sociales, de la pauvreté et des disparités régionales," Cahiers du GREThA (2007-2019) 2013-25, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    3. Hajer Kratou & Mohamed Goaied, 2016. "How Can Globalization Affect Income Distribution? Evidence from Developing Countries," The International Trade Journal, Taylor & Francis Journals, vol. 30(2), pages 132-158, March.
    4. 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.
    5. G. C. Lim & Paul D. McNelis, 2014. "Income Inequality, Trade and Financial Openness," Melbourne Institute Working Paper Series wp2014n07, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    6. Takashi Kamihigashi & Yosuke Sasaki, 2022. "The Impact of Multi-Factor Productivity on Income Inequality," Discussion Paper Series DP2022-31, Research Institute for Economics & Business Administration, Kobe University.
    7. Khan, Muhammad Aamir & Walmsley, Terrie & Mukhopadhyay, Kakali, 2021. "Trade liberalization and income inequality: The case for Pakistan," Journal of Asian Economics, Elsevier, vol. 74(C).
    8. Boniface Ngah EPO & Jules Médard NANA DJOMO & Mark Wiykiynyuy TANGWA & Éric Dieudonné OBAMA OBAMA, 2023. "Threshold effect of banking on income inequalities in developing countries: the importance of mobile money," Working Papers of the African Governance and Development Institute. 23/073, African Governance and Development Institute..
    9. Naranpanawa, Athula & Arora, Rashmi, 2014. "Does Trade Liberalization Promote Regional Disparities? Evidence from a Multiregional CGE Model of India," World Development, Elsevier, vol. 64(C), pages 339-349.
    10. Grace Carolina GUEVARA-ROSERO, 2017. "The Effect of Trade on Agglomeration within Regions," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 75-97, March.
    11. Kazuhiro Kumo & Alexandra Koval & Irina Korgun & Olga Trofimenko, 2018. "Foreign Trade and Regional Inequality:The Case of the Russian Federation," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(3), pages 884-895.
    12. de Moraes, Claudio Oliveira & Roquete, Raphael Moses & Gawryszewski, Gustavo, 2023. "Who needs cash? Digital finance and income inequality," The Quarterly Review of Economics and Finance, Elsevier, vol. 91(C), pages 84-93.
    13. Ahmed, Azleen Rosemy & Masih, Mansur, 2017. "What is the link between financial development and income inequality? evidence from Malaysia," MPRA Paper 79416, University Library of Munich, Germany.
    14. Abhimanyu Dadu & Namrata Gulati, 2014. "Inequality, neighborhoods and variation in prices," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2014-001, Indira Gandhi Institute of Development Research, Mumbai, India.
    15. Natalya Yuryevna Sopilko & Natalia Anatolyevna Navrotskaia & Olga Yuryevna Myasnikova & Nataliya Vital evna Bondarchuk, 2020. "Potential and Development Prospects Assessment of Electric Power Integration of the Eurasian Economic Union Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 10(3), pages 37-44.
    16. Huang, Kaixing & Yan, Wenshou & Sim, Nicholas & Guo, Yuqing & Xie, Fang, 2022. "Can trade explain the rising trends in income inequality? Insights from 40 years of empirical studies," Economic Modelling, Elsevier, vol. 107(C).
    17. Boniface Ngah EPO & Jules Médard NANA DJOMO & Mark Wiykiynyuy TANGWA & Éric Dieudonné OBAMA OBAMA, 2023. "Threshold effect of banking on income inequalities in developing countries: the importance of mobile money," Working Papers 23/073, European Xtramile Centre of African Studies (EXCAS).
    18. Namrata Gulati & Abhimanyu Dadu, 2014. "Inequality, Neighbourhoods and Variation in Prices," Economics Bulletin, AccessEcon, vol. 34(3), pages 1463-1484.
    19. Nazarczuk Jarosław M. & Umiński Stanisław, 2018. "The geography of openness to foreign trade in Poland: The role of special economic zones and foreign-owned entities," Bulletin of Geography. Socio-economic Series, Sciendo, vol. 39(39), pages 97-111, March.
    20. Naranpanawa, Athula & Arora, Rashmi, 2012. "Trade Liberalisation and Regional Disparities: Evidence from a Multi-Regional General Equilibrium Model of India," Conference papers 332270, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    21. Koh, Sharon G. M. & Lee, Grace H. Y. & Siah, Audrey K. L., 2022. "The Resurgence of Income Inequality in Asia-Pacific: The Role of Trade Openness, Educational Attainment and Institutional Quality," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 56(3), pages 11-27.

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    More about this item

    Keywords

    Trade openness; regional inequality; India; Brazil; time series regression; Ouverture commerciale; inégalités régionales; Inde; Brésil; séries temporelles.;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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