IDEAS home Printed from https://ideas.repec.org/a/ura/ecregj/v1y2018i3p884-895.html

Foreign Trade and Regional Inequality:The Case of the Russian Federation

Author

Listed:
  • Kazuhiro Kumo

    (Institute of Economic Research, Hitotsubashi University)

  • Alexandra Koval

    (St. Petersburg State University)

  • Irina Korgun

    (The Institute of Russian Studies, Hankuk University of Foreign Studies)

  • Olga Trofimenko

    (Saint Petersburg State University)

Abstract

An impact of foreign trade on national inequality levels is one of the most discussed topics both by public, politicians and academics. This paper contributes to this discussion by focusing on the role of foreign trade in the Russian Federation during its rapid economic transformation in 1990–2010. During this period, the trade-led growth model has helped to raise country-average levels of income. But simultaneously, it seemingly triggered greater inequality in income appropriation between different social groups. Looking into causality between foreign trade and this observed income disparity from the regional perspective will help us to understand the poverty problem associated with income inequality better and enhance the effectiveness of policies of the Russian government targeting income re-distribution. In particular, this research aims to answer a question whether during 1990’s–2000’s increasing openness to foreign trade was pro-poor on the regional level or not. Another point of interest is whether the distributional impact of growing foreign trade on incomes in Russian regions had been positive or negative. Several hypotheses for the Russian Federation are tested in the paper. First, higher openness to foreign trade improved income distribution in the Russian regions. Second, globalization of regions as a result of a more active foreign trade benefited individuals in the middle-income decile. This follows an idea that trade liberalization cuts living costs and raises living standards. Third, regions with larger rural population will tend to have more uneven income distribution. This follows from the neo-classical assumption that in rural areas a poverty burden tends to be larger. Active involvement in the trade of agricultural products might improve income distribution in such regions. Additionally, the share of dependent population among households must affect poverty headcount or the depth of poverty as previous studies on poverty determinants naturally suggested.

Suggested Citation

  • Kazuhiro Kumo & Alexandra Koval & Irina Korgun & Olga Trofimenko, 2018. "Foreign Trade and Regional Inequality:The Case of the Russian Federation," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(3), pages 884-895.
    • Handle: RePEc:ura:ecregj:v:1:y:2018:i:3:p:884-895
    as

    Download full text from publisher

    File URL: http://economyofregion.ru/Data/Issues/ER2018/September_2018/ERSeptember2018_884_895.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ann Harrison, 2007. "Globalization and Poverty," NBER Books, National Bureau of Economic Research, Inc, number harr06-1, August.
    2. Kumo, Kazuhiro, 2015. "Research on Poverty in Transition Economies: A Meta-analysis on Changes in the Determinants of Poverty," RRC Working Paper Series 51, Russian Research Center, Institute of Economic Research, Hitotsubashi University.
    3. Amelia U. Santos-Paulino, 2012. "Trade, Income Distribution And Poverty In Developing Countries: A Survey," UNCTAD Discussion Papers 207, United Nations Conference on Trade and Development.
    4. Aisbett, Emma & Harrison, Ann & Zwane, Alix, 2006. "Globalization and poverty: what is the evidence?," MPRA Paper 36595, University Library of Munich, Germany.
    5. 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.
    6. Afesorgbor, Sylvanus Kwaku & Mahadevan, Renuka, 2016. "The Impact of Economic Sanctions on Income Inequality of Target States," World Development, Elsevier, vol. 83(C), pages 1-11.
    7. Vyacheslav Bobkov & Olesya Veredyuk, 2013. "Inequality of living standards in Russia: internal and international context (the early 1990s and the 2000s)," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(3), pages 62-70.
    8. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-959, December.
    9. Andrés Rodríguez-Pose, 2012. "Trade and Regional Inequality," Economic Geography, Taylor & Francis Journals, vol. 88(2), pages 109-136, April.
    10. Li, Muqun & Coxhead, Ian, 2009. "Trade, Technology and Inequality in a Developing Country: Theory and Evidence from China," Staff Paper Series 539, University of Wisconsin, Agricultural and Applied Economics.
    11. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
    12. Nicita, Alessandro, 2009. "The price effect of tariff liberalization: Measuring the impact on household welfare," Journal of Development Economics, Elsevier, vol. 89(1), pages 19-27, May.
    13. Yuriy Gorodnichenko & Klara Sabirianova Peter & Dmitriy Stolyarov, 2010. "Inequality and Volatility Moderation in Russia: Evidence from Micro-Level Panel Data on Consumption and Income," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 209-237, January.
    14. Robert J. Barro, 2015. "Convergence and Modernisation," Economic Journal, Royal Economic Society, vol. 125(585), pages 911-942, June.
    15. Rutherford, Thomas & Tarr, David, 2008. "Regional household and poverty effects of Russia's accession to the world trade organization," Policy Research Working Paper Series 4570, The World Bank.
    16. Guanghua Wan & Ming Lu & Zhao Chen, 2007. "Globalization And Regional Income Inequality: Empirical Evidence From Within China," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(1), pages 35-59, March.
    17. Bourguignon, F. & Morrisson, C., 1990. "Income distribution, development and foreign trade : A cross-sectional analysis," European Economic Review, Elsevier, vol. 34(6), pages 1113-1132, September.
    18. Vyacheslav Bobkov & Olesya Veredyuk, 2013. "Inequality of living standards in Russia: internal and international context (the early 1990s and the 2000s)," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(3), pages 53-62.
    19. Pinelopi Koujianou Goldberg & Nina Pavcnik, 2007. "Distributional Effects of Globalization in Developing Countries," Journal of Economic Literature, American Economic Association, vol. 45(1), pages 39-82, March.
    20. Michael V. Alexeev & Clifford G. Gaddy, 1993. "INCOME DISTRIBUTION IN THE U.S.S.R. IN THE 1980s," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 39(1), pages 23-36, March.
    21. Roberto Ezcurra & Andr�s Rodr�guez-Pose, 2014. "Trade Openness and Spatial Inequality in Emerging Countries," Spatial Economic Analysis, Taylor & Francis Journals, vol. 9(2), pages 162-182, June.
    22. repec:dau:papers:123456789/4295 is not listed on IDEAS
    23. Nanak Kakwani & Hyun H. Son, 2006. "New Global Poverty Counts," Working Papers 29, International Policy Centre.
    24. Meschi, Elena & Vivarelli, Marco, 2009. "Trade and Income Inequality in Developing Countries," World Development, Elsevier, vol. 37(2), pages 287-302, February.
    25. Mr. Andrew Berg & Anne O. Krueger, 2003. "Trade, Growth, and Poverty: A Selective Survey," IMF Working Papers 2003/030, International Monetary Fund.
    26. Irina Denisova, 2012. "Income Distribution and Poverty in Russia," OECD Social, Employment and Migration Working Papers 132, OECD Publishing.
    27. David Dollar & Aart Kraay, 2004. "Trade, Growth, and Poverty," Economic Journal, Royal Economic Society, vol. 114(493), pages 22-49, February.
    28. Tullio Buccellato & Tomasz Mickiewicz, 2009. "Oil and Gas: A Blessing for the Few. Hydrocarbons and Inequality within Regions in Russia," Europe-Asia Studies, Taylor & Francis Journals, vol. 61(3), pages 385-407.
    29. Georg Hirte & Christian Lessmann, 2014. "Trade and Interregional Inequality," ERSA conference papers ersa14p304, European Regional Science Association.
    30. Harrison, Ann (ed.), 2007. "Globalization and Poverty," National Bureau of Economic Research Books, University of Chicago Press, number 9780226318004.
    31. Federico Cingano, 2014. "Trends in Income Inequality and its Impact on Economic Growth," OECD Social, Employment and Migration Working Papers 163, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Huang, Kaixing & Yan, Wenshou & Sim, Nicholas & Guo, Yuqing & Xie, Fang, 2022. "Can trade explain the rising trends in income inequality? Insights from 40 years of empirical studies," Economic Modelling, Elsevier, vol. 107(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Olper, Alessandro & Curzi, Daniele & Swinnen, Johan, 2018. "Trade liberalization and child mortality: A Synthetic Control Method," World Development, Elsevier, vol. 110(C), pages 394-410.
    2. Le, Minh Son, 2014. "Trade openness and household welfare within a country: A microeconomic analysis of Vietnamese households," Journal of Asian Economics, Elsevier, vol. 33(C), pages 56-70.
    3. Ouedraogo, Benoît & Ouedraogo, Idrissa & Sawadogo, Hamidou, 2025. "Effects of trade openness on income inequality in sub-Saharan Africa: direct effects and transmission channels," International Economics, Elsevier, vol. 184(C).
    4. Ural Marchand, Beyza, 2012. "Tariff pass-through and the distributional effects of trade liberalization," Journal of Development Economics, Elsevier, vol. 99(2), pages 265-281.
    5. L. Alan Winters & Antonio Martuscelli, 2014. "Trade Liberalization and Poverty: What Have We Learned in a Decade?," Annual Review of Resource Economics, Annual Reviews, vol. 6(1), pages 493-512, October.
    6. Harrison, Ann & Rodríguez-Clare, Andrés, 2010. "Trade, Foreign Investment, and Industrial Policy for Developing Countries," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4039-4214, Elsevier.
    7. Naranpanawa, Athula & Bandara, Jayatilleke S. & Selvanathan, Saroja, 2011. "Trade and poverty nexus: A case study of Sri Lanka," Journal of Policy Modeling, Elsevier, vol. 33(2), pages 328-346, March.
    8. Lawrence, Robert Z., 2013. "Associations of Southeast Asian Nations, People's Republic of China, and India Growth and the Rest of the World: The Role of Trade," Working Paper Series rwp13-013, Harvard University, John F. Kennedy School of Government.
    9. Zhaohua Li & Mohammad Monirul Islam & Farha Fatema, 2017. "Trading for Sustainable Development Goals: Trade Policy, Inequality and Poverty in Emerging Economies," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 7(10), pages 818-838, October.
    10. Florian Dorn & Clemens Fuest & Niklas Potrafke, 2022. "Trade openness and income inequality: New empirical evidence," Economic Inquiry, Western Economic Association International, vol. 60(1), pages 202-223, January.
    11. Carole Ibrahim, 2022. "Globalization and income inequality in developing countries: a GMM approach," SN Business & Economics, Springer, vol. 2(8), pages 1-14, August.
    12. Bergh, Andreas & Nilsson, Therese, 2014. "Is Globalization Reducing Absolute Poverty?," World Development, Elsevier, vol. 62(C), pages 42-61.
    13. Amelia U. Santos‐Paulino & Alisa DiCaprio & Maria V. Sokolova, 2019. "The development trinity: How regional integration impacts growth, inequality and poverty," The World Economy, Wiley Blackwell, vol. 42(7), pages 1961-1993, July.
    14. Rodríguez-Pose, Andrés & Hardy, Daniel, 2015. "Addressing poverty and inequality in the rural economy from a global perspective," LSE Research Online Documents on Economics 63257, London School of Economics and Political Science, LSE Library.
    15. Kris James Mitchener & Se Yan, 2014. "Globalization, Trade, And Wages: What Does History Tell Us About China?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55(1), pages 131-168, February.
    16. Valentin F. Lang & Ms. Marina Mendes Tavares, 2018. "The Distribution of Gains from Globalization," IMF Working Papers 2018/054, International Monetary Fund.
    17. Roberto Ezcurra & Alba Villar, 2021. "Globalization and spatial inequality: Does economic integration affect regional disparities?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 67(2), pages 335-358, October.
    18. Koh, Sharon G. M. & Lee, Grace H. Y. & Siah, Audrey K. L., 2022. "The Resurgence of Income Inequality in Asia-Pacific: The Role of Trade Openness, Educational Attainment and Institutional Quality," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 56(3), pages 11-27.
    19. Harrison, Ann E. & Rodriguez-Clare, Andres, 2009. "Trade, Foreign Investment, and Industrial Policy," MPRA Paper 15561, University Library of Munich, Germany.
    20. Philippe Aghion & Robin Burgess & Stephen J. Redding & Fabrizio Zilibotti, 2008. "The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India," American Economic Review, American Economic Association, vol. 98(4), pages 1397-1412, September.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ura:ecregj:v:1:y:2018:i:3:p:884-895. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Alexey Naydenov (email available below). General contact details of provider: http://www.economyofregion.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.