Trade openness and income inequality, empirical evidence from selected developing countries

Abstract EN

This paper aims to examine the impact of trade openness on income inequality for selected developing countries.

Using balanced panel data for ten developing countries covering the period between 1993 and 2017, the feasible generalized least squares method was used to estimate the study models.

The estimation results showed that trade openness improves income equality levels in developing countries, while imports as a percentage of GDP play a positive and important role in reducing income inequality levels.

The impact of exports as a percentage to GDP is statistically insignificant.

Therefore, one can conclude that trade openness is an important element in improving income equality in developing countries.

However, before generalizing the study findings further research is needed on a larger sample with more developing countries.