Document Type : Original Research
Authors
1 Department of Economics, Faculty of Economics and Management Sciences, University of Ibadan, Ibadan, Nigeria
2 Department of Economics, University of Uyo, P.M.B. 1017, Uyo, Akwa Ibom State, Nigeria
3 Department of Economics, University of Nigeria, Nsukka, Nigeria
Abstract
The main objective of this study was to empirically examine the influence of globalization on income inequality in Nigeria from 1986 to 2021. The income inequality was represented by the Gini coefficient while globalization was measured by key indices like foreign direct investment, remittances, and trade openness. With the use of the autoregressive distributed lag (ARDL) approach which was as a result of the stationary of our series at levels and first difference as reported by the Augmented Dickey-Fuller unit root test, the study observed that a long-run relationship exists amid inequality and measures of globalization. In the short-run, it was realized that foreign direct investment, remittances, trade openness, and urbanization aided in reducing income inequality in the short-run while inflation accelerated income inequality within the study period. In the long-run, the only measure of globalization that significantly reduce income inequality is remittances; while foreign direct investment significantly increased income inequality in the long-run. the paper concluded that it is not inevitable that measures of globalization have different influence on inequality of income and wealth depending on time.
Keywords
Main Subjects
©2022 The Author(s). This is an open access article distributed under the terms of the Creative Commons Attribution (CC BY 4.0), which permits unrestricted use, distribution, and reproduction in any medium, as long as the original authors and source are cited. No permission is required from the authors or the publishers.
Ali, A. M., & Isse, H. S. (2007). Foreign Aid and Free Trade and Their Effect on Income: A Panel Analysis. The Journal of Developing Areas, 41(1), 127-142.
Arkolakis, C., Costinot, A., & Rodríguez-Clare, A. (2012). New Trade Models, Same Old Gains? American Economic Review, 102(1), 94-130.
Atan, J. A., & Effiong, U. E. (2020). Economic Growth in a Cross-Cultural Environment: Lessons for Selected African Countries. Journal of Economics and Sustainable Development, 11(24), 59-74. Retrieved from https://doi.org/10.7176/JEP/11-24-05
Atif, S. M., Srivastav, M., Sauytbekova, M., & Arachchige, U. K. (2012). Globalization and Income Inequality: A Panel Data Analysis of 68 Countries. Kiel und Harmburg: ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft.
Atkinson, A. (1997). Bringing Income Distribution in from the Cold. Economic Journal, 107, 297-321.
Atkinson, A., Piketty, T., & Saez, E. (2011). Top Incomes in the Long Run of History. Journal of Economic Literature, 49(1), 3-71.
Babones, S., & Zhang, X. (2008). Heterogenity in the Global South in the relationship between Income Inequality and Foreign Trade. International Review of Modern Sociology, 34(1), 95-108.
Baek, I., & Shi, O. (2016). Impact of Economic Globalization on Income Inequality: Developed Economies vs Emerging Economies. Global Economy Journal, 16(1), 49-61.
Beckfield, J. (2006). European Integration and Income Inequality. American Sociological Review, 71(6), 964-985.
Bensidoun, I., Jean, S., & Sztulman, A. (2011). International trade and Income Distribution: reconsidering the evidence. Review of World Economics / Weltwirtschaftliches Archiv, 147(4), 593-619.
Bergh, A., & Nilsson, T. (2011). Do Liberalisation and Globalization Increase Income Inequality? European Journal of Political Economy, 26, 488-505.
Bhalla, S. (2002). Imagine there is no country. Washington, DC: Institute for International Economics.
Borjas, G. J., & Ramey, V. A. (1994). Time-Series Evidence on the Sources of Trends in Wage Inequality. The American Economic Review, 84, 10-16.
Borjas, G., Freeman, R., & Katz, L. (1997). How Much Do Immigration and Trade Affect Labor Market Outcomes? Brookings Papers on Economic Activity, 1, 1-90.
Bourguignon, F., & Morrisson, C. (2002). The size distribution of income among world citizens, 1820-1990. American Economic Review, September, 727-744.
Bukhari, M., & Munir, K. (2016). Impact of Globalization on Income Inequality in Selected Asian Countries. Munich Personal RePEc Archive, MPRA Paper No. 74248. Retrieved from https://mpra.ub.uni-muenchen.de/74248/
Calderon, C., & Chong, A. (2001). External sector and income inequality in interdependent economies using a dynamic panel data approach. Economic Letters, 71(2), 225-231.
Cassette, A., Fleury, N., & Petit, S. (2012). Income Inequalities and International Trade in Goods and Services: Short- and Long-Run Evidence. The International Trade Journal, 26(3), 223-254.
Central Bank of Nigeria (CBN). (2021). Nigeria engagement with Bretton Woods Institution. Abuja, Nigeria: Central Bank of Nigeria, Understanding monetary policy series No. 10.
Chakrabarti, A. (2000). Does Trade Cause Inequality? Journal of Economic Development, 25(2), 1-21.
Costinot, A., & Rodríguez-Clare, A. (2014). Trade Theory with Numbers: Quantifying the Consequences of Globalization. In E. G. Gopinath, & K. Rogoff (Eds.), Handbook of International Economics (Vol. 4, pp. 197-261). Amsterdam: Elsevier.
Cragg, M., & Epelbaum, M. (1996). Why Has Wage Dispersion Grown in Mexico? Is it the Incidence of Reforms of the Growing Demand for Skills? Journal of Development Economics, 51(1), 99–116.
Dasgupta, B. (1997). SAP: Issues and Conditionalities: A Global Review. Economic and Political Weekly, 33(20/21), 1091–1104. Retrieved from http://www.jstor.org/stable/4405415
Demir, F., Ju, J., & Zhou, Y. (2012). Income Inequality and Structures of International Trade. Asia-Pacific Journal of Accounting & Economics, 19(2), 167-180.
Dollar, D., & Kraay, A. (2001). Growth is good for the poor. . World Bank Policy Research Working Paper No. 2587.
Dorn, F., Fuest, C., & Potrafke, N. (2018). Globalization and Income Inequality Revisited. Germany: CESifo Working Paper No. 6859, Category 1: Public Finance.
Dorn, F., Fuest, C., & Potrafke, N. (2021). Trade openness and income inequality: New empirical evidence. Economic Inquiry, 60(1), 202-223. doi:10.1111/ecin.13018
Dreher, A. (2006). The Influence of Globalization on Taxes and Social Policy - An Empirical Analysis for OECD Countries. European Journal of Political Economy, 22, 179-201.
Ebele, S. N., Nnenna, N. E., & Nkechinyere, R. U. (2019). Income Inequality Effects of Globalization in Oil-Rich Nigeria: Evidence from Time Series. American Journal of Economics, 9(1), 1-10. Retrieved from https://doi.org/10.5923/j.economics.20190901.01
Egger, H., & Kreickemeier, U. (2009). Firm Heterogeneity and the Labor Market Effects of Trade Liberalization. International Economic Review, 50(1), 187–216.
Feenstra, R., & Hanson, G. (1996). Globalization, Outsourcing, and Wage Inequality. American Economic Review, 86(2), 240–245.
Feenstra, R., & Hanson, G. (1997). Foreign Direct Investment and Relative Wages, Evidence from Mexico’s Maquiladoras. Journal of International Economics, 42, 371-393.
Feenstra, R., & Hanson, G. (1999). The Impact of Outsourcing and High-Technology Capital on Wages: Estimates for the United States, 1979–1990. Quarterly Journal of Economics, 114(3), 907–940.
Felbermayr, G. J. (2005). Dynamic Panel Data Evidence on the Trade-Income Relation. Review of World Economics / Weltwirtschaftliches Archiv, 141(4), 583-611.
Frias, J., Kaplan, D., & Verhoogen, E. (2012). Exports and Within-Plant Wage Distributions: Evidence from Mexico. American Economic Review, 102, 435–440.
Georgantopoulos, A. G., & Tsamis, A. D. (2011). The Impact of Globalization on Income Distribution: The Case of Hungary. Research Journal of International Studies, 21, 17-25.
Goldberg, P., & Pavcnik, N. (2007). Distributional Effects of Globalization in Developing Countries. Journal of Economic Literature, 45, 39–82.
Gourdon, J., Maystre, M., & Melo, J. (2008). Openness, inequality, and poverty: endowments matter. Journal of International Trade & Economic Development, 17, 343-378.
Gozgor, G., & Ranjan, P. (2017). Globalization, Inequality, and Redistribution: Theory and Evidence. World Economy, 40(12), 2704-2751.
Ha, N., Le, N., & Trung-Kien, P. (2019). The Impact of Urbanization on Income Inequality: A Study in Vietnam. Journal of Risk and Financial Management, 12(3), 145. Retrieved from https://doi.org/10.3390/jrfm12030146
Hepenstrick, C., & Tarasov, A. (2015). Trade Openness and Cross-country Income Differences. Review of International Economics, 23(2), 271-302.
Heshmati, A. (2004). The Relationship between Income Inequality, Poverty and Globalisation. IZA, Discussion Paper No. 1277.
Hyeon-Seung, H., & Cyn-Young, P. (2019). A New Index of Globalization: Measuring Impacts of Integration on Economic Growth and Income Inequality. Asian Development Bank (ADB) Economics Working Paper Series, No. 587.
Ifeakachukwu, N. (2020). Globalisation, Economic Growth and Income Inequality in Nigeria. Indian Journal of Human Development, 14, 202-212. doi:10.1177/0973703020948484
Jaumotte, F., Lall, S., & Papageorgiou, C. (2013). Rising Income Inequality: Technology, or Trade and Financial Globalization? IMF Economic Review, 61(2), 271-309.
Kauder, B. &. (2015). Globalization and Social Justice in OECD Countries. Review of World Economics /Weltwirtschaftliches Archiv, 151(2), 353-376.
Kilic, C. (2015). Effects of Globalization on Economic Growth: Panel Data Analysis for Developing Countries. Economic Insights Trends Challenges, 4(127), 1-11.
Kindleberger, C. (1965). Europe’s post-war growth: The role of labour supply. New York, USA: Oxford University Press.
Lamoreaux, N., & Shapiro, I. (2019). The Bretton Woods Agreements. New Haven and London: Yale University Press .
Le, Q. H., Do, Q. A., Pham, H. C., & Nguyen, T. D. (2021). The Impact of foreign direct investment on income inequality in Vietnam. Economies, 9(27). Retrieved from https://doi.org/10.3390/economies9010027
Leamer, E. (1998). In Search of Stolper–Samuelson Linkages between International Trade and Lower Wages. In S. Collins (Ed.), Imports, Exports and the American Worker (pp. 141-202). Washington, DC: Brookings.
Lee, K. K. (2014). Globalization, Income Inequality and Poverty: Theory and Empirics. Social System Studies, 28, 109-134.
Lu, X., & Cai, G. (2011). Effective Factor Endowments, Trade Openness and Income Distribution in China. Frontier of Economies, 6(2), 188-210.
Maku, O. E., Ogede, J. S., Adelowokan, O. A., & Oshinowo, B. O. (2021). Exploring the interaction of trade openness, income inequality, and poverty in Nigeria. Journal of Enterprise and Development (JED), 3(2), 113-130.
Manasse, P., & Turrini, A. (2001). Trade, Wages, and ‘Superstars. Journal of International Economics, 54(1), 97-117.
Meschi, E., & Vivarelli, M. (2007). Globalization and Income Inequality. IZA Discussion Paper No. 2958.
Milanovic, B. (2005). Can We Discern the Effect of Globalization on Income Distribution? Evidence from Household Surveys. The World Bank Economic Review, 19(1), 21-44.
Milton, T. J. (1995). The effects of international trade on income inequality in the United States, 1979-1992. Ann Arbor, USA: UMI Company.
Muhibbullah, M., & Das, M. R. (2019). The impact of inflation on the income inequality of Bangladesh: A Time Series Analysis. International Journal of Business and Technopreneurship, 9(2), 141-150.
Munch, J., & Skaksen, R. (2008). Human Capital and Wages in Exporting Firms. Journal of International Economics, 75(2), 363-372.
Munir, S., Kiani, A. K., Khan, A., & Jamal, A. (2013). The Relationship between Trade Openness and Income Inequalities Empirical Evidences from Pakistan (1972-2008). Academic Journal of Management Sciences, 2(1), 21-35.
Myer, J. (2021). Inequality. World Economic Forum.
Nantob, N. (2015). Income Inequality and Inflation in Developing Countries: An Empirical Investigation. Economics Bulletin, 35(4), 2888-2902.
Nwosa, P. I. (2020). Globalisation, Economic Growth and Income Inequality in Nigeria. Indian Journal of Human Development, 14(2), 202-212. Retrieved from https://doi.org/10.1177/0973703020948484
Odo, C., Agbo, I., & Agbaji, B. (2020). Globalization and Developing Economy: Evidence from Nigeria. Journal of Financial Risk Management, 9(4), 518-530.
Ofori, I. K., Gbolonyo, E. Y., Dossou, T. A., & Nkrumah, R. K. (2022). Remittances and income inequality in Africa: Financial development thresholds for economic policy . Research in Globalization, 4. Retrieved from https://doi.org/10.1016/j.resglo.2022.100084
Ogunyomi, O. O., Daisi, O. R., & Oluwashikemi, R. A. (2013). Economic Globalization, Income Inequality and Economic Growth in Nigeria: A Static Data Analysis (1986-2010). ABC Journal of Advanced Research, 2(2), 55-68.
Ohlin, B. (1933). Interregional and International Trade. Cambridge: Harvard University Press.
Osode, O. E., Iheonu, C. O., & Dauda, R. (2020). On the Relationship Between Globalization and Income Inequality: Does institution matter? . Journal of Public Affairs, 22(2), e2433. Retrieved from https://doi.org/10.1002/pa.2433
Oxfam. (2013). Takk evasion damaging poor country economies. Retrieved from https://www.oxfam.org/en/press-releases/tax-evasion-damaging-poor-country-economie
Pavcnik, N. (2011). Globalization and Within-Country Income Inequality. In M. Bacchetta, & M. Jansen (Eds.), Making Globalization Socially Sustainable (pp. 233-259). Geneva/Switzerland: International Labour Organization and World Trade Organization.
Potrafke, N. (2015). The Evidence on Globalisation. World Economy, 38(3), 509-552.
Rezk, H., Amer, G., & Fathi, N. (2022). The impact of FDI on income inequality in Egypt. Econ Change Restruct , 55, 2011–2030. Retrieved from https://doi.org/10.1007/s10644-021-09375-z
Rodriguez, F., & Rodrik, D. (2001). Trade policy and economic growth: A skeptic’s guide to cross-national evidence. In B. S. Bernanke, & K. Rogoff (Eds.), NBER Macroeconomics Annual 2000 (pp. 261-325). Cambridge: MIT Press.
Rodriguez-Pose, A. (2012). Trade and Regional Inequality. Economic Geography, 88(2), 109-136.
Rodrik, D. (1998). Why Do more open Economies have bigger Governments? Journal of Political Economy, 106(5), 997-1032.
Rudra, N. (2004). Openness, Welfare Spending, and Inequality in the Developing World. International Studies Quarterly, 48(3), 683-709.
Sala-i-Martin, X. (2002). The disturbing ‘rise’ of world income inequality. NBER Working Paper No. 8904. Cambridge, MA: National Bureau of Economic Research.
Sampson, T. (2014). . Selection into Trade and Wage Inequality. American Economic Journal: Microeconomics, 6(3), 157–202.
Samuelson, P. (1939). The Gains from International Trade. Canadian Journal of Economics, 5(2), 195–205.
Schulze, G., & Ursprung, H. W. (1999). Globalisation of the Economy and the Nation State. World Economy, 22(3), 295–352.
Shangquan, G. (2000). Economic Globalization: Trends, Risks and Risk Prevention. Economic & Social Affairs. CDP Background Paper No. 1 ST/ESA/2000/CDP/1.
Silva, J. A. (2007). Trade and Income Inequality in a Less Developed Country: The Case of Mozambique. Economic Geography, 83(2), 111-136.
Silva, J. A., & Leichenko, R. M. (2004). Regional Income Inequality and International Trade. Economic Geography, 80(3), 261-286.
Sinn, H. W. (2003). The New Systems Competition. Oxford: Blackwell.
Stiglitz, J. (2002). Globalization and its Discontents. London: Penguin Books.
Stolper, W., & Samuelson, P. (1941). Protection and Real Wages. Review of Economic Studies, 9, 58-73.
Sutcliffe, B. (2003). A more or less unequal world? World income distribution in the 20th century. Working Paper No. 54, Political Economy Research Institute, University of Massachusetts, Amherst. Published as: World inequality and globalization. Oxford Review of Economic Policy, 20(1), 15-37.
Tian, X., Wang, B., & Dayanandan, A. (2008). The Impact of Economic Globalization on Income Distribution: Empirical Evidence in China. Economics Bulletin, 4(35), 1-8.
Uddin, M. N. (2020). Bangladesh: Income Inequality and Globalization. Asian Business Review, 10(1), 43-52. Retrieved from https://doi.org/10.18034/abr.v10i1.461
Ursprung, H. (2008). Globalisation and the Welfare State. In S. Durlauf, & L. Blume (Eds.), The New Palgrave Dictionary of Economics (Second ed.). Köln: Palgrave Macmillan.
World Bank. (2012). World Development Report 2013: Jobs . Washington, DC: World Bank.
World Trade Organization (WTO). (1995). The WTO Agreements Series 2: General Agreement on Tariffs and Trade. Genève, Switzerland: World Trade Organization.
)