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Trade and regional inequality

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  • Andrés Rodríguez-Pose

    ()
    (IMDEA Social Sciences Institute)

Abstract

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, it is found that while increases in trade per se do not lead to greater territorial polarisation, in combination with certain country-specific conditions, trade has a positive and significant association with regional inequality. In particular, states with higher interregional differences in sectoral 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 polarising 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.

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Bibliographic Info

Paper provided by Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales in its series Working Papers with number 2010-13.

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Date of creation: 25 Jun 2010
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Publication status: Published in Economic Geography 88(2), April 2012: 109-136
Handle: RePEc:imd:wpaper:wp2010-13

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Keywords: trade; regional inequalit; low and medium income countries;

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Citations

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Cited by:
  1. Guangdong Li & Chuanglin Fang, 2014. "Analyzing the multi-mechanism of regional inequality in China," The Annals of Regional Science, Springer, vol. 52(1), pages 155-182, January.
  2. Farole, Thomas & Reis, Jose Guilherme & Wagle, Swarnim, 2010. "Analyzing trade competitiveness : a diagnostics approach," Policy Research Working Paper Series 5329, The World Bank.
  3. Lessmann, Christian, 2014. "Spatial inequality and development — Is there an inverted-U relationship?," Journal of Development Economics, Elsevier, vol. 106(C), pages 35-51.
  4. Ezcurra, Roberto & Rodríguez-Pose, Andrés, 2013. "Does economic globalization a ffect regional inequality? A cross-country analysis," CEPR Discussion Papers 9557, C.E.P.R. Discussion Papers.
  5. Georg Hirte & Christian Lessmann, 2014. "Trade, Integration, and Interregional Inequality," CESifo Working Paper Series 4799, CESifo Group Munich.
  6. Leonel Muinelo-Gallo & Andreas P. Kyriacou & Oriol Roca-Sagalés, 2013. "Fiscal decentralization and regional disparities: the importance of good governance," Documentos de Trabajo (working papers) 13-03, Instituto de Economía - IECON.

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