A comparative analysis between the relation of income distribution and economic regional integration in East Asia and Latin America (Un análisis comparativo entre la relación de distribución de ingreso y la integración económica regional en Asia Oriental y América Latina)

Ángela

Description

ABsTRACT
This paper analyses the relationship between inequality and de facto
regional economic integration during the last two decades in Latin America
and East Asia Pacific regions, focusing on intra-regional exports. Globalization
has been considered as a driving of inequality, although export-led growth
models are associated with high economic growth rates. Export-led growth
models have been more dynamic in East Asia than in Latin America, through
the development of supply chain networks of intermediate and final goods.
Research questions explore the relation between inequality and patterns of
de facto intra-regional trade. Empirical analysis uses a fixed effects panel data
with Heteroskedasticity and Autocorrelation Consistent (HAC) covariance
matrix. Results showed that increments in regional intra-trade are associated
with reductions of inequality, more in East Asia Pacific than in Latin America.
The contribution of this paper is the introduction of intra-regional trade as a
new factor that is negatively associated with inequality.
REsUMEN
Este trabajo analiza la relación entre la desigualdad y la integración económica
regional de facto durante las últimas dos décadas en América Latina y
la región de Asia Oriental y el Pacífico, centrándose en las exportaciones
intraregionales. La globalización ha sido considerada como una causa de desigualdad.
Sin embargo, los modelos de promoción de exportaciones son asociados con
altas tasas de crecimiento económico. Los modelos de promoción de exportaciones
han sido más dinámicos en Asia Oriental que en América Latina, a
través del desarrollo de redes de suministro de bienes intermedios y finales. Las
preguntas de investigación exploran la relación entre desigualdad y los patrones
del comercio intra-regional de facto. El análisis empírico hace uso de un
panel de datos con efectos fijos, con una matriz de covarianza consistente ante
heterocedasticidad. Los resultados muestran que los incrementos en comercio
intra-regional están asociados con una reducción de la desigualdad, más en la
región de Asia Oriental y el Pacífico que en América Latina. La contribución
de este trabajo es la introducción del comercio intra-regional como un nuevo
factor que es asociado negativamente a la desigualdad.

Sujets

• Economic inequality
• Covariance matrix
• Heteroscedasticidad

Informations

• Publié par: erevistas
• Publié le: 01 janvier 2011
• Nombre de lectures: 10
• Langue: English

Extrait

A COMPARATIVE AnALYSIS BETWEEn THE RELATIOn OF InCOME DISTRIBUTIOn
AnD ECOnOMIC REGIOnAL InTEGRATIOn In EAST ASIA AnD LATIn AMERICA
Ángela Jeaneth
Ospina Enciso* A comparative analysis between the
Waseda University
relation of income distribution and
economic regional integration in East
Recibido: 28 de febrero de 2011
Concepto de evaluación: 25 de abril de 2011 Asia and Latin America
Aceptado: 31 de mayo de 2011
ABsTRACT
This paper analyses the relationship between inequality and de facto
regional economic integration during the last two decades in Latin America
and East Asia Pacific regions, focusing on intra-regional exports. Globalization
has been considered as a driving of inequality, although export-led growth
models are associated with high economic growth rates. Export-led have been more dynamic in East Asia than in Latin America, through
the development of supply chain networks of intermediate and final goods.
Research questions explore the relation between inequality and patterns of
de facto intra-regional trade. Empirical analysis uses a fixed effects panel data
with Heteroskedasticity and Autocorrelation Consistent (HAC) covariance
matrix. Results showed that increments in regional intra-trade are associated
with reductions of inequality, more in East Asia Pacific than in Latin America.
The contribution of this paper is the introduction of intra-regional trade as a
new factor that is negatively associated with inequality.
Key words: Income inequality, de facto economic regional integration,
intra-regional exports, Heteroskedasticity and Autocorrelation Consistent,
covariance matrix.
Un análisis comparativo entre la relación de distribución
de ingreso y la integración económica regional en Asia
Oriental y América Latina
REsUMEN
Este trabajo analiza la relación entre la desigualdad y la integración eco-
nómica regional de facto durante las últimas dos décadas en América Latina y
la región de Asia Oriental y el Pacífico, centrándose en las exportaciones intra-
regionales. La globalización ha sido considerada como una causa de desigualdad.
Sin embargo, los modelos de promoción de exportaciones son asociados con
altas tasas de crecimiento económico. Los modelos de promoción de expor-
taciones han sido más dinámicos en Asia Oriental que en América Latina, a * Economista. Candidata a
Magíster Waseda University. través del desarrollo de redes de suministro de bienes intermedios y finales. Las
107Ángela Jeaneth Ospina Enciso
preguntas de investigación exploran la relación entre desigualdad y los patro-
nes del comercio intra-regional de facto. El análisis empírico hace uso de un
panel de datos con efectos fijos, con una matriz de covarianza consistente ante
heterocedasticidad. Los resultados muestran que los incrementos en comercio
intra-regional están asociados con una reducción de la desigualdad, más en la
región de Asia Oriental y el Pacífico que en América Latina. La contribución
de este trabajo es la introducción del comercio intra-regional como un nuevo
factor que es asociado negativamente a la desigualdad.
Palabras clave: Desigualdad de ingresos, integración económica regional
de facto, exportaciones intra-regionales, matriz de varianzas y covarianzas,
heterocedasticidad.
Códigos JEL: F15, 057
INTRODUCTION region has also tried to follow the patterns of an
export-led growth model since the nineties, but
Inequality is a controversial issue for both develo- it continues focusing on commodities, fuel, ores
ped and developing countries, due to its negative and metals, and some manufacturing that reaches
implications on growth and reduction of poverty neither the level of sophistication nor the high
(Cornia & Court, 2001). Furthermore, inequality technology component of East Asia.
is acquiring importance in the discussion of the Recent research on inequality has focused
international community nowadays, in some way on the relation between globalization and inequa-
influenced by the efforts towards the achievement lity. Openness offers countries the possibility to
of the Millennium Development Goals. integrate with world trade through the supply of
Latin America is the most unequal region in goods and services where they have comparative
the world. Meanwhile, East Asia has maintained advantages and demand a wider basket of goods
lower levels of inequality than Latin America, as a than their internal market, but these dynamics
product of the Asian Miracle after the sixties and may have effects on inequality.
posterior reforms until the nineties, although in Intra-regional trade may promote develo-
the last two decades some countries have slightly ping of productive infrastructure and influence the
worse inequality indicators. In Latin America, very development of frontier cities. neighbor markets
high levels seem to be an historical ele- can work as an extension of domestic markets in
ment of the socioeconomic development, before the absence of tariffs, which can benefit small-size
and after the globalization process. business, and it is linked to job generation for
In the case of Latin America, disparities lie lower-income people. Additionally, it may genera-
in the unequal distribution of means of produc- te virtuous cycles related to cooperation projects,
tion —mainly land— that has been concentrated transference and absorption of technology and
within elite groups, generation through gene- improvements in life conditions.
ration, with a reduced social mobility (Cornia & Economic regional integration has not been
Kiiski, 2001). used widely as an explicit channel to promote
In the East Asia region low levels of inequa- inequality reduction. This research evaluates the
lity have coincided additionally with a strengthe- null hypothesis of economic regional integration
ning of the economic regional integration through not being related with inequality. The alternative
the development of supply chain networks of hypothesis is that economic regional integration
intermediate and final goods. The Latin America is related negatively with inequality.
108
Finanzas y Política Económica, ISSN: 2248-6046, Vol. 3, No. 1, enero-junio, 2011A COMPARATIVE AnALYSIS BETWEEn THE RELATIOn OF InCOME DISTRIBUTIOn
AnD ECOnOMIC REGIOnAL InTEGRATIOn In EAST ASIA AnD LATIn AMERICA
This paper limits the concept of economic he shows if intra-regional exports near 60% in-
regional integration to de facto trade, excluding equality increases, but if they are higher than 65%,
inequality reduces. the analysis of the economic regional integration
de jure. The analysis of de facto trade will be made However, conclusions are difficult to genera-
through intra-regional exports in the empirical lize because of the limitations regarding data qua-
analysis. lity in inequality studies and the reduced number
This research uses a panel data model with of countries in the sample.
a sample of 16 countries, 6 from the East Asia The structure of this paper is as follows: The
first section reviews literature of determinants of Pacific region and 10 from Latin America and the
Caribbean, from 1990 to 2009, and utilizes as con- inequality for each region of the analyses. Section
trol variables export patterns, sectoral composition, 2 introduces trends of inequality, and Section 3,
labor force reallocation, changes in the role of wo- trade patterns. Section 4 offers the theoretical
men in society, growth levels and macroeconomic framework of the relation between increments of
stability indicators. trade and inequality used in this paper. Section 5
introduces the data and the methodology of the The contribution of this paper is the intro-
duction of intra-regional trade as a new factor that empirical study. Section 6 presents the outcomes
affects inequality. This paper studies the trends achieved from the model and analysis implications
of inequality and intra-trade, their relation, and of the results. Section 7 presents the concluding
finally makes recommendations of public policies remarks.
to strengthen economic regional integration as a
way to promote virtuous cycles, in order to gene-
section 1: determinants of income
rate pro-poor growth with beneficial distributional
distribution by regionsimpacts.
There is not very much literature that refers
to integration de facto as an explicit determinant The literature about inequality is very wide, inclu-
on inequality, as this paper proposes. Previous ding study cases for countries and regions.
research is more focused on analyzing a European Regarding the Latin America region, Mila-
integration process and de jure economic regio- novic and Yitzhaki (2002, p. 1) conclude that the
nal integration, through which welfare states are high income disparities are explained by differences
reduced, and supra states can create institutions within-countries. Cornia and Kiiski (op. cit.) conclu-
that lighten possible increments of inequality de that one of the most important determinants
(Beckfield, 2006). through history has been land concentration.
Regional economic integration can increa- Between 1950 and 1960 the