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Spatial dependence of global income inequality: The role of economic complexity

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  • Fadi Fawaz
  • Masha Rahnama-Moghadamm

Abstract

There is extensive literature investigating the macroeconomic sources of income inequality. To our knowledge, this literature ignores the spatial dimension of global income inequality, specifically the relationship between economic relatedness and income inequality. Using panel data for 129 countries from 1964 to 2013, we show that income inequality in a country is affected by the income inequality and economic complexity of its trading partners. We find that (1) a country’s income inequality is positively correlated with the average income inequality among its top trading partners; and (2) that trade with economically more complex countries is correlated with reductions in income inequality.

Suggested Citation

  • Fadi Fawaz & Masha Rahnama-Moghadamm, 2019. "Spatial dependence of global income inequality: The role of economic complexity," The International Trade Journal, Taylor & Francis Journals, vol. 33(6), pages 542-554, November.
    • Handle: RePEc:taf:uitjxx:v:33:y:2019:i:6:p:542-554
    DOI: 10.1080/08853908.2018.1535336
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    Citations

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    Cited by:

    1. Balland, Pierre-Alexandre & Broekel, Tom & Diodato, Dario & Giuliani, Elisa & Hausmann, Ricardo & O'Clery, Neave & Rigby, David, 2022. "The new paradigm of economic complexity," Research Policy, Elsevier, vol. 51(3).
    2. Balland, Pierre-Alexandre & Broekel, Tom & Diodato, Dario & Giuliani, Elisa & Hausmann, Ricardo & O'Clery, Neave & Rigby, David, 2022. "Reprint of The new paradigm of economic complexity," Research Policy, Elsevier, vol. 51(8).
    3. Chien-Chiang Lee & En-Ze Wang, 2021. "Economic Complexity and Income Inequality: Does Country Risk Matter?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 154(1), pages 35-60, February.
    4. Rui Xue & KeYu Li & FeiFei Wang & Claude Baron, 2024. "Research Progress and Hot-spot Analysis of The Economic Complexity Research Based on CiteSpace," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 14(1), pages 1-10.
    5. Ponce, Pablo & Yunga, Fernando & Larrea-Silva, Jhohana & Aguirre, Nikolay, 2023. "Spatial determinants of income inequality at the global level: The role of natural resources," Resources Policy, Elsevier, vol. 84(C).
    6. C'esar A. Hidalgo, 2022. "Knowledge is non-fungible," Papers 2205.02167, arXiv.org.
    7. Hidalgo, César A., 2023. "The policy implications of economic complexity," Research Policy, Elsevier, vol. 52(9).
    8. Dominik Hartmann & Flavio L. Pinheiro, 2022. "Economic complexity and inequality at the national and regional level," Papers 2206.00818, arXiv.org, revised Jun 2022.
    9. Byron Quito & María de la Cruz del Río‐Rama & José Álvarez‐García & Ronny Correa‐Quezada, 2022. "Impact factors and space‐time characteristics of income inequality in a global sample," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(6), pages 1850-1868, December.
    10. C'esar A. Hidalgo, 2022. "The Policy Implications of Economic Complexity," Papers 2205.02164, arXiv.org, revised Aug 2023.
    11. Ben Saad, Myriam & Brahim, Mariem & Schaffar, Alexandra & Guesmi, Khaled & Ben Saad, Rym, 2023. "Economic complexity, diversification and economic development: The strategic factors," Research in International Business and Finance, Elsevier, vol. 64(C).
    12. Cesar A. Hidalgo, 2022. "Knowledge is non-fungible," Papers in Evolutionary Economic Geography (PEEG) 2229, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Nov 2022.
    13. Verónica Amarante & Bibiana Lanzilotta & Joaquín Torres, 2023. "Inequality and productive structure: New evidence at the world level," WIDER Working Paper Series wp-2023-9, World Institute for Development Economic Research (UNU-WIDER).

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