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The Relationship between Income Inequality, Poverty and Globalisation

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Author Info
Heshmati, Almas () (MTT Economic Research and IZA Bonn)

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Abstract

This paper introduces two composite indices of globalisation. The first is based on the Kearney/Foreign Policy magazine and the second is obtained from principal component analysis. They indicate the level of globalisation and show how globalisation has developed over time for different countries. The indices are composed of four components: economic integration, personal contact, technology and political engagement, each generated from a number of indicators. A breakdown of the index into major components provides possibilities to identify sources of globalisation at the country level and associate it with economic policy measures. The empirical results show that a low rank in the globalisation process is due to political and personal factors with limited possibility for the developing countries to affect. The high ranked developed countries share similar patterns in distribution of various components. The indices were also used in a regression analysis to study the causal relationships between income inequality, poverty and globalisation. Inequality is negatively correlated to globalisation, and globalisation reduces poverty.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1277.

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Length: 38 pages
Date of creation: Sep 2004
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Handle: RePEc:iza:izadps:dp1277

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Related research
Keywords: globalisation; income inequality; poverty; indices; principal component;

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Find related papers by JEL classification:
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
F15 - International Economics - - Trade - - - Economic Integration
O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
  2. Heshmati, Almas, 2003. "Measurement of a Multidimentional Index of Globalization and its Impact on Income Inequality," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
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  7. Farhad Noorbakhsh, 1998. "The human development index: some technical issues and alternative indices," Journal of International Development, John Wiley & Sons, Ltd., vol. 10(5), pages 589-605.
  8. Suthiph, Chirathivat & Murshed, S. Mansoob, 2001. "Globalization and Openness: Lessons from the Recent Crisis in Southeast Asia," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
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  15. Collier, Paul & Dollar, David, 2002. "Aid allocation and poverty reduction," European Economic Review, Elsevier, vol. 46(8), pages 1475-1500, September. [Downloadable!] (restricted)
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  16. Miller, Tracy C., 2001. "Impact of globalization on U.S. wage inequality: Implications for policy," The North American Journal of Economics and Finance, Elsevier, vol. 12(3), pages 219-242, November. [Downloadable!] (restricted)
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  20. Seshanna, Shubhasree & Decornez, Stephane, 2003. "Income polarization and inequality across countries: an empirical study," Journal of Policy Modeling, Elsevier, vol. 25(4), pages 335-358, June. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Nissanke, Machiko & Thorbecke, Erik, 2006. "A Quest for Pro-Poor Globalization," Working Papers RP2006/46, World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  2. Heshmati, Almas, 2004. "The World Distribution of Income and Income Inequality," IZA Discussion Papers 1267, Institute for the Study of Labor (IZA). [Downloadable!]
  3. Abdelkrim Araar & Jean-Yves Duclos, 2007. "Poverty and Inequality Components: a Micro Framework," Cahiers de recherche 0735, CIRPEE. [Downloadable!]
  4. Robert J. Gordon & Ian Dew-Becker, 2008. "Controversies about the Rise of American Inequality: A Survey," NBER Working Papers 13982, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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