Globalization and Income Inequality in Latin America

Globalization and Income diversity in Latin the StatesIvan MendozaGlobalization and Income Inequality in Latin America and The CaribbeanIntroductionOver the past two decades, developing countries cook gradually committed themselves to much engagement with the global parsimony by pursual the path of administer liberalization and openness toward international markets (J.D.K. Chap. 10 p.416). As a result, many developing countries learn experienced annexs in in spite of appearance- country income disparity. The growing income inconsistency has coincided with the period of increasing exposure of countries to globalisation through and through an increased of trade flows and investment across international b sound outs. These suppuration have sparked a large debate in the academic and constitution circles about the effects of globalization on income disparity in spite of appearance- countries (J.D.K. Chap. 10 p.564). This written report provide discuss whether globalizati on has contributed to inwardly- country income discrimination by centre on one aspect of globalization, mainly the countries trade flows, specifically exports.Test- theoryConsidering that the interest of developing countries might be more in place with those of the developed/ advanced countries, reflects the integration of emerging and developing countries to the global economy through a rapid pace of trade globalization to nominate opportunities that will create speed economic development and development. This wave of trade liberalization has had a great impact on the income inequality within developing countries. Therefore, I argue that globalization should lead to an increase of the income inequality within emerging and developing countries, in new(prenominal) words, an increase in total trade (exports) is highly related to the increase of the income inequality within a developing country.Method and Data CollectionIn order to test the hypothesis that an increase in export s is highly related to the increase of the income inequality of developing countries, I will examine the economic addition and trade of emerging and developing countries, with emphasis on the region of Latin America and the Caribbean. Some of the countries in the region have experienced rapid economic growth and development, but in the last years this growth has slowdown (WEO p. 56), so examining their growth is a grave way to depicted object the effects of globalization and the within-country income inequality. Also, we might find other aspects of globalization that ar associated with income inequality. In order to test the hypothesis, I collected information to fancy the economic performance of 32 developing countries in the Latin America and the Caribbean region covering the period of 1996-2013. This data has been collected from reliable sources such(prenominal) as valet stinting Outlook (October 2014) released by the International pecuniary Funds (IMF) and the World lea rning Indicators (WDI) report from World Bank (WB). This data contains the dependent multivariates and the expansionary variable along with other supplemental data.Moreover, to accomplish the fair game of this paper providing some evidences on the effects of globalization on income inequality within developing countries I will be using the following data table (i) the Real Gross Domestic Product (GDP) table, which shows the annual division economic performance for the selected developing countries, (ii) the Trade table, which shows the sum of exports and imports percentage in terms of GDP percentage, this reflects the integration of the countries in the global economy. (iii) the Exports of good and run table, since exports is a component of trade and GDP, it shows the effects of trade on GDP because if exports is positive, then GDP increases, (iv) Gini forefinger, which is the standard measure for income inequality.Relationship amid the variablesConsidering the effects of glo balization on the income inequality within a country, we have trade as the variable for globalization and the amount of income inequality within a country is generally measured by using the Gini Index. The Gini Index ranges from 0 to 100, where a value of 0 indicates that everyone has the same income (that is, perfect inequality) and a value of 100 indicates that all the income is earned by one soul (that is, maximum inequality) (p. 564). However, since most of these countries economy depends on trade, as we can seem on the Trade (% GDP) table (high percentage means they import more than what they export/produce) to simplify the relationship between globalization and income inequality, I will using the Export of goods and services, which is one of the components of trade. So, using the data of Exports (% GDP) as the expansionary variable and Gini index as the dependent, we can see for the selected countries that have experience drop in Exports shares, can be associated with a decr ease of income inequality. For example, in countries such as Colombia, Dominican Republic, El Salvador, Paraguay and Peru after 2006 their exports have gone through a period of highs and lows along the same range and inequality has move accordinly to the change in exports, but most of the time its been going down. Although inequality has gone in most of the selected countries, in cases such as costa Rica and Panama, on that points been period where Exports goes increase and the Gini index still goes down. This shows that the impact of Exports (trade) on income inequality is not significant as expected and that there might be other components of globalization affecting income inequality.ConclusionIn conclusion, the evidences show that there is positive relationship between trade liberalization and the income distribution within developing countries in the Latin America and the Caribbean As Exports (trade) increases/ decreases the level of income inequality, harmonize to the Gini I ndex, increases/ decreases. However, we found that there is not a significant change on income inequality when Exports changes.DiscussionMoreover, this finding provides an exploratory support to other hypotheses that other components of globalization might have a greater impact on within- country income inequality. Other factors that drive income inequality are the importance of engineering science in virtually all sectors of the global economy, and the advances in information and discourse technology (ICT) that helped make globalization possible. (J.D.K. Chap. 14 p. 564). man-made lake World Economic Outlook (IFM p.189) https//www.imf.org/external/pubs/ft/weo/2014/02/pdf/text.pdfTrade (% of GDP)Country Average20062007200820092010201120122013(1996- 2005)Antigua and Barbuda37.6 119.7117.4116.3 105.1106.0104.897.8Argentina 25.2 36.2 36.2 36.7 30.6 32.5 33.9 29.9 29.3Bahamas, The 102.3 100.1 100.7 100.0 87.5 90.2 101.0 107.7Barbados 88.8 94.4 94.4 99.6 86.0 96.9 93.0 96.8 Belize 115 .2 122.8 122.3 131.9 107.7 115.6 124.3 Bolivia 51.4 74.5 76.1 82.9 68.6 75.5 82.5 85.1 brazil 22.4 25.8 25.2 27.1 22.1 22.8 24.5 26.6 27.6Chile 61.0 71.9 75.8 81.0 66.8 69.8 72.9 68.4 65.5Colombia 35.1 38.2 36.3 38.1 34.3 33.7 38.7 38.2 37.4Costa Rica 92.6 104.4 102.2 100.6 84.0 79.1 79.2 78.7 73.9Dominica 101.7 89.8 93.1 99.4 87.3 90.9 86.9 88.6Dominican Rep. 77.5 68.0 66.7 64.7 52.5 57.2 60.4 59.1 57.6Ecuador 49.5 59.7 62.6 68.1 52.1 62.1 66.0 64.0 63.6El Salvador 65.8 71.8 74.2 76.6 61.9 68.8 74.6 69.7 72.2Grenada 99.5 80.1 82.4 77.7 69.4 70.9 74.0 73.3 Guatemala 55.9 66.8 67.9 64.1 57.1 62.1 64.0 61.0 58.6Guyana 203.2 Haiti 47.8 59.5 52.2 56.9 56.7 73.7 67.6 61.4 Honduras 114.3 133.1 135.1 135.7 96.9 109.4 122.2 120.6 117.5Jamaica 90.0 100.8 101.3 113.6 86.9 80.9 83.9 83.4 Mexico 51.3 56.4 57.1 58.1 56.0 60.9 63.7 66.4 64.2Nicaragua 60.4 76.8 82.6 87.8 77.9 85.5 95.8 101.0 92.9Panama 144.5 146.2 145.4 149.0 138.7 139.7 158.3 154.8 137.7Paraguay 93.6 107.8 103.5 103.5 96 .3 106.6 102.7 99.9 92.7Peru 36.6 51.1 53.9 56.6 46.4 50.0 55.2 51.7 48.4St. Kitts and Nevis 103.2 88.4 83.6 86.6 72.9 77.2 74.6 80.3 St. Lucia 116.1 112.7 105.1 114.5 101.0 113.0 106.7 103.6 St. Vincent andthe Grenadines 103.4 88.0 89.8 92.2 86.0 84.0 84.6 85.7 Suriname 66.3 Trinidad and Tobago 99.2 118.7 102.3 107.1 90.9 92.4 151.0 Uruguay 43.1 62.0 59.2 65.2 55.3 53.4 54.0 55.8 Venezuela, RB 49.9 58.7 56.2 51.8 38.5 46.1 49.6 50.4 Source World Development Indicators.http//databank.worldbank.org/data/views/reports/tableview.aspx?t=tableviewsavedlg=1Exports of good and services (% of GDP)Country Average20062007200820092010201120122013(1996- 2005)Antigua and Barbuda 65.0 48.0 45.1 46.4 46.6 46.1 47.6 46.3 Argentina 14.0 20.4 19.8 19.9 17.4 17.5 17.8 15.8 14.5Bahamas, The 43.2 44.7 46.7 46.0 39.9 40.9 43.6 44.8 Barbados 42.3 44.9 45.3 46.0 41.5 46.3 39.3 42.5 Belize 52.5 61.1 61.1 62.3 51.6 58.2 61.2 Bolivia23.2 41.8 41.8 44.9 35.7 41.2 44.1 47.3 Brazil 11.3 14.4 13.4 13.7 1 1.0 10.9 11.9 12.6 12.6Chile 31.2 42.4 43.8 41.5 37.2 38.1 38.0 34.2 32.6Colombia* 16.0 17.6 16.5 17.8 16.0 15.9 18.7 18.3 17.7Costa Rica** 45.3 49.1 48.7 45.4 42.3 38.2 37.2 37.2 35.1Dominica 44.9 37.8 35.8 35.9 32.4 35.7 33.8 38.8 Dominican Rep.* 36.2 30.0 28.8 25.5 22.2 23.0 25.0 25.1 26.0Ecuador* 24.0 30.3 31.9 34.2 25.2 28.7 31.5 30.9 30.5El Salvador* 25.6 25.7 25.9 26.9 23.2 25.9 28.0 25.6 26.4Grenada 39.1 23.0 24.9 23.0 22.6 21.8 23.7 24.1 Guatemala 22.5 24.9 25.6 24.7 24.0 25.8 26.6 24.9 23.7Guyana 94.9 Haiti 12.6 14.5 13.2 12.7 14.1 12.1 13.4 13.3 Honduras 51.0 56.1 53.5 51.3 39.5 45.8 51.3 50.4 47.9Jamaica 37.5 40.1 39.7 41.9 34.5 31.3 30.4 30.4 Mexico 25.4 27.6 27.7 27.9 27.3 29.9 31.2 32.631.7Nicaragua 20.0 27.0 29.0 31.3 30.9 35.9 40.1 43.0 40.5Panama** 73.9 76.7 76.1 78.7 75.5 70.6 79.3 79.8 71.0Paraguay* 51.6 58.7 56.7 54.0 51.5 55.1 52.6 51.3 49.7Peru* 17.5 30.2 30.5 28.4 25.2 26.6 29.7 26.6 23.7St. Kitts and Nevis 42.2 37.4 33.7 31.3 23.9 28.8 31.3 34.3 St. L ucia 53.7 43.2 39.9 45.3 46.1 50.2 43.2 44.7 St. Vincent andthe Grenadines 43.8 34.7 31.0 30.2 28.5 26.9 27.5 27.6 Suriname 24.5 Trinidad and Tobago 54.3 81.4 65.2 71.4 52.3 58.9 88.1 Uruguay21.3 30.3 29.1 30.2 28.0 27.2 26.8 26.2 Venezuela, RB 30.2 36.5 31.1 30.8 18.1 28.5 29.9 26.2 Source World Development Indicators.http//databank.worldbank.org/data/views/reports/tableview.aspx?t=tableviewsavedlg=1Change in Income Inequality is the Selected Countrieshttp//databank.worldbank.org/data/views/reports/chart.aspxWorks CitedFrieden, Jeffry, and Lake, David, and Kenneth Schultz. 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World Development Indicators. Gini Index. Created 12/12/2014http//databank.worldbank.org/data/views/reports/chart.aspx