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International trade, development traps, and the core-periphery structure of income inequality

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  • Hartmann, Dominik
  • Bezerra, Mayra
  • Lodolo, Beatrice
  • Pinheiro, Flávio L.

Abstract

Research on economic complexity has shown that a country's type of exports conditions its future path of economic diversification and economic growth. Yet little emphasis has been put on the inequality associated with the types of products traded between countries and different regions of the world. Here we analyze the income inequality associated with the imports and exports of 116 countries in the period from 1970 to 2010. Our analysis shows that methods from network science and visual complexity research can help to reevaluate old theories in economics, such as coreperiphery structures in international trade or structural development traps. Our results illustrate that the core-periphery structure of global trade affects not only the income inequality between countries, but also the income inequality within countries. Moreover, they reveal the structural constraints that developing and emerging economies face in promoting inclusive growth and benchmark their productive transformations with cases of successful catching up and developed economies. The results show that countries, such as South Korea or Germany, have benefited from outsourcing high inequality products. In contrast, some middle-income countries, such as Brazil or South Africa, face structural development constraints consisting of a large average distance of their export products to low inequality products and a "gravitational force" towards high inequality products. Finally, developing economies, such as Nicaragua or Sri Lanka face a double development trap for inclusive growth, as their economies depend on both a large share of high inequality exports and imports.

Suggested Citation

  • Hartmann, Dominik & Bezerra, Mayra & Lodolo, Beatrice & Pinheiro, Flávio L., 2019. "International trade, development traps, and the core-periphery structure of income inequality," Hohenheim Discussion Papers in Business, Economics and Social Sciences 01-2019, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
  • Handle: RePEc:zbw:hohdps:012019
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    2. Hartmann, Dominik & Zagato, Ligia & Gala, Paulo & Pinheiro, Flavio L., 2021. "Why did some countries catch-up, while others got stuck in the middle? Stages of productive sophistication and smart industrial policies," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 1-13.
    3. Margarida Bandeira Morais & Julia Swart & Jacob Arie Jordaan, 2021. "Economic Complexity and Inequality: Does Regional Productive Structure Affect Income Inequality in Brazilian States?," Sustainability, MDPI, vol. 13(2), pages 1-23, January.
    4. Dominik Hartmann & Diogo Ferraz & Mayra Bezerra & Andreas Pyka & Flavio L. Pinheiro, 2021. "Comparing cars with apples? Identifying the appropriate benchmark countries for relative ecological pollution rankings and international learning," Papers 2107.14365, arXiv.org.
    5. Hartmann, Dominik & Jara-Figueroa, Cristian & Kaltenberg, Mary & Gala, Paulo, 2019. "Mapping stratification: The industry-occupation space reveals the network structure of inequality," Hohenheim Discussion Papers in Business, Economics and Social Sciences 06-2019, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    6. Elena Paglialunga & Andrea Coveri & Antonello Zanfei, 2020. "Climate change and inequality in a global context. Exploring climate induced disparities and the reaction of economic systems," Working Papers 2003, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2020.
    7. Diogo Ferraz & Fernanda P. S. Falguera & Enzo B. Mariano & Dominik Hartmann, 2021. "Linking Economic Complexity, Diversification, and Industrial Policy with Sustainable Development: A Structured Literature Review," Sustainability, MDPI, vol. 13(3), pages 1-29, January.
    8. Olivera Kostoska & Sonja Mitikj & Petar Jovanovski & Ljupco Kocarev, 2020. "Core-periphery structure in sectoral international trade networks: A new approach to an old theory," PLOS ONE, Public Library of Science, vol. 15(4), pages 1-24, April.
    9. Marwil J. Dávila-Fernández & Serena Sordi, 2019. "From open economies to attitudes towards change. Growth and institutions in Latin America and Asia," Department of Economics University of Siena 809, Department of Economics, University of Siena.
    10. Dávila-Fernández, Marwil J. & Sordi, Serena, 2020. "Structural change in a growing open economy: Attitudes and institutions in Latin America and Asia," Economic Modelling, Elsevier, vol. 91(C), pages 358-385.
    11. Wouter G. Bam & Karolien Bruyne & Mare Laing, 2021. "The IO–PS in the context of GVC-related policymaking: The case of the South African automotive industry," Journal of International Business Policy, Palgrave Macmillan, vol. 4(3), pages 410-432, September.
    12. JosŽ Luis Oreiro & Luciano Luiz Manarin & Paulo Gala, 2020. "Deindustrialization, economic complexity and exchange rate overvaluation: the case of Brazil (1998-2017)," PSL Quarterly Review, Economia civile, vol. 73(295), pages 313-341.

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    trade; inequality; economic complexity; development trap;
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