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Globalisation, Inequality and Poverty Relationships: A Cross Country Evidence

Author

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  • Neutel, Marcel

    (University of Groningen)

  • Heshmati, Almas

    (Jönköping University)

Abstract

In this research, the relationship between globalisation and poverty and income inequality is determined. A whole new globalisation index has been constructed based on data covering a large sample of 65 developing countries. The index is based on the globalisation index proposed by A.T. Kearney / Foreign Policy Magazine. The index is composed of four sub-indices, namely: economic integration, personal contacts, technological connections and political engagement. Results from cross-sectional regression analysis show that there is a significant relationship between globalisation and poverty and income inequality. Globalisation leads to poverty reduction and it reduces income inequality. The relationship between globalisation and poverty remains significant when controlled for regional heterogeneity. A non-linear analysis shows that poverty has diminishing returns to benefits from globalisation.

Suggested Citation

  • Neutel, Marcel & Heshmati, Almas, 2006. "Globalisation, Inequality and Poverty Relationships: A Cross Country Evidence," IZA Discussion Papers 2223, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp2223
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    References listed on IDEAS

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    1. Wade, Robert Hunter, 2004. "Is Globalization Reducing Poverty and Inequality?," World Development, Elsevier, vol. 32(4), pages 567-589, April.
    2. David Dollar & Aart Kraay, 2004. "Trade, Growth, and Poverty," Economic Journal, Royal Economic Society, vol. 114(493), pages 22-49, February.
    3. Heshmati, Almas, 2004. "Data Issues and Databases Used in Analysis of Growth, Poverty and Economic Inequality," IZA Discussion Papers 1263, Institute of Labor Economics (IZA).
    4. World Bank, 2002. "World Development Indicators 2002," World Bank Publications - Books, The World Bank Group, number 13921, December.
    5. Mr. Ayhan Kose & Mr. Kenneth Rogoff & Mr. Eswar S Prasad & Shang-Jin Wei, 2003. "Effects of Financial Globalization on Developing Countries: Some Empirical Evidence," IMF Occasional Papers 2003/007, International Monetary Fund.
    6. World Bank, 2002. "Globalization, Growth, and Poverty : Building an Inclusive World Economy," World Bank Publications - Books, The World Bank Group, number 14051, December.
    7. Martin Ravallion, 2004. "The Debate on Globalization, Poverty and Inequality: why Measurement Matters," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 1, March.
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    Cited by:

    1. Rana Ejaz Ali Khan & Nadia Bashir, 2011. "Trade Liberalization, Poverty and Inequality Nexus: A Case Study of India," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 1(3), pages 114-119, September.
    2. Asongu, Simplice & Odhiambo, Nicholas, 2020. "The role of Globalization in Modulating the Effect of Environmental Degradation on Inclusive Human Development," MPRA Paper 103143, University Library of Munich, Germany.
    3. Gülsün Yay & Hüseyin Taştan & Asuman Oktayer, 2016. "Globalization, Economic Freedom, and Wage Inequality: A Panel Data Analysis," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 63(5), pages 581-601, December.
    4. Muhammad Shahbaz & Nanthakumar Loganathan & Aviral Tiwari & Reza Sherafatian-Jahromi, 2015. "Financial Development and Income Inequality: Is There Any Financial Kuznets Curve in Iran?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 124(2), pages 357-382, November.
    5. Temilola Osinubi, Tolulope, 2020. "The Role Of Income Inequality In The Globalisation-Poverty Nexus: Empirical Evidence From Mint Countries," Ilorin Journal of Economic Policy, Department of Economics, University of Ilorin, vol. 7(2), pages 67-89, June.
    6. Olukayode Emmanuel Maku & Olorunfemi Yasiru Alimi & Fidelis Obioma Ogwumike, 2021. "Transmission Mechanism of Globalization and Its Impact on Human Welfare Development in Sub-Saharan African Countries," Business & Management Compass, University of Economics Varna, issue 1, pages 45-64.
    7. Chambers, Dustin & Wu, Ying & Yao, Hong, 2008. "The impact of past growth on poverty in Chinese provinces," Journal of Asian Economics, Elsevier, vol. 19(4), pages 348-357, August.
    8. Verhoeven, Loesje & Ritzen, Jo, 2022. "Globalisation increased trust in northern and western Europe between 2002 and 2018," MERIT Working Papers 2022-005, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    9. Alastaire Sèna ALINSATO, 2015. "Globalization, Poverty And Role Of Infrastructures," Journal of Economics and Political Economy, KSP Journals, vol. 2(1s), pages 197-212, May.
    10. Siham Matallah & Amal Matallah, 2017. "Do Globalization and Economic Freedom Trigger Economic Growth in MENA Countries? Empirical Evidence and Policy Implications," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 3(2), pages 76-87, June.

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    More about this item

    Keywords

    globalisation; poverty; inequality; indices;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • F15 - International Economics - - Trade - - - Economic Integration
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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