Mexico, Turkey, and Korea in the era of globalization. The author assesses the effects of globalization on the wage share, as measured by the effects of international trade and foreign direct investment (FDI) intensity of the economy. At the same time, the processes of globalization and opening up have been accompanied by major currency crises in most developing countries in the last decade—hence the author also examines the impact that exchange rate depreciation and economic recession have had on wage share.
The paper develops a Post- Keynesian conflicting claims model for an open economy under the pressure of globalization. An equation for the wage share is estimated for each country using the ‘seemingly unrelated regression’ method. The results show that both recessions and nominal depreciations have a clear and lasting negative effect on the manufacturing wage share in all countries, whereas the effect of openness, in particular international trade, depends on industrial policy structure. Increased export intensity leads to a decline the manufacturing wage share in Turkey and Mexico, but has no significant effect in Korea. The positive expectations from FDI also do not materialized in any of the three countries.
Ozlem Onaran is a PERI Research Scholar and Associate Professor at Vienna University of Economics and Business Administration.
This paper analyzes the changes in the wage share in manufacturing industry in Mexico, Turkey, and Korea in the era of globalization. The author assesses the effects of globalization on the wage share, as measured by the effects of international trade and foreign direct investment (FDI) intensity of the economy. At the same time, the processes of globalization and opening up have been accompanied by major currency crises in most developing countries in the last decade—hence the author also examines the impact that exchange rate depreciation and economic recession have had on wage share.
The paper develops a Post- Keynesian conflicting claims model for an open economy under the pressure of globalization. An equation for the wage share is estimated for each country using the ‘seemingly unrelated regression’ method. The results show that both recessions and nominal depreciations have a clear and lasting negative effect on the manufacturing wage share in all countries, whereas the effect of openness, in particular international trade, depends on industrial policy structure. Increased export intensity leads to a decline the manufacturing wage share in Turkey and Mexico, but has no significant effect in Korea. The positive expectations from FDI also do not materialized in any of the three countries.
Ozlem Onaran is a PERI Research Scholar and Associate Professor at Vienna University of Economics and Business Administration.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
file. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by Political Economy Research Institute, University of Massachusetts at Amherst in its series Working Papers with number
wp132.
Find related papers by JEL classification: E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution E25 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration O19 - Economic Development, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
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.:
David Dollar & Aart Kraay, 2004.
"Trade, Growth, and Poverty,"
Economic Journal,
Royal Economic Society, vol. 114(493), pages F22-F49, 02.
[Downloadable!] (restricted)
Other versions: