Globalization, Income Inequality and Poverty: Theory and Empirics

This paper examines the effects of globalization including international trade and financial integration on income distribution and poverty.It reviews a large number of current theoretical and empirical studies about how globalization affects income inequality and poverty.In particular, the complex nexus among globalization, growth, income distribution, and poverty is investigated.Most empirical studies report complicated and frequently conditional relationships between globalization, inequality and poverty.This study also investigates the effects of globalization on inequality and poverty, using crosscountry regressions.It finds that financial globalization increases income inequality and poverty in general, while there is a conditional relationship between trade openness and inequality and poverty.