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The Impact of Trade Openness on Regional Inequality: The Cases of India and Brazil

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  • Marie Daumal

Abstract

Regional inequalities are large in India and Brazil and represent a development challenge. This article aims to determine whether regional inequalities are linked to a country's trade openness. An annual indicator of regional inequalities is constructed for India for the period 1980--2004 and for Brazil from 1985--2004. Results from time series regressions show that Brazil's trade openness contributes to a reduction in regional inequalities. The opposite result is found for India. India's trade openness is an important factor aggravating income inequality among Indian states. In both countries, inflows of foreign direct investment are found to increase regional inequalities.

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  • Marie Daumal, 2013. "The Impact of Trade Openness on Regional Inequality: The Cases of India and Brazil," The International Trade Journal, Taylor & Francis Journals, vol. 27(3), pages 243-280, August.
    • Handle: RePEc:taf:uitjxx:v:27:y:2013:i:3:p:243-280
    DOI: 10.1080/08853908.2013.796839
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    More about this item

    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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