Trade Flows and Income Distribution: A Survey of Theoretical and Empirical Findings
- Oniore O. Jonathan
- Bernard O. Anthony
- Emily Gyang
- ( paper pages. 147 - 173 )
Abstract
This study reviewed theoretical and empirical
studies that connect trade flows and trade policies to income
distribution/inequality, driven by data uncertainty, and inconclusive, mixed
empirical and theoretical proof. The paper may also help to clarify the winners
and losers of the African Continental Free Trade Area Treaty that was recently
signed. The paper deployed a systematic
analysis of the relative strengths and shortcomings of existing literature on
the subject matter, concentrating on economic journal articles. The paper found
that trade flows and trade policies have a major effect on the distribution of
income and on inequality across countries. In addition, the study found that
winners and losers also exist from every other trade policy; however, depending
on the use of available labour and economic growth performance, there could be
an increase or decrease in income distribution/inequality. Economic growth, for
instance, offers a channel through which free trade decreases inequality by
increasing both initial income and subsequent growth. It also appears that
trade flows rely on the level of human capital endowments, as relatively
well-educated countries appear to have higher trade export shares and lower income
inequality than countries with poor primary export shares. The study therefore proposed
the formulation of effective complementary domestic policies aimed at expanding
basic education to have the requisite inequality-reducing effects, and economic
diversification away from primary exports with high market volatility. Finally,
when linking trade flows to income distribution, the continuity and
sustainability of trade policies, such as the African Continental Free Trade
Area should be considered.
Citation
Oniore O. Jonathan, Bernard O. Anthony, Emily Gyang.
2022.
"Trade Flows and Income Distribution: A Survey of Theoretical and Empirical Findings"
The Nigerian Journal of Economic and Social Studies,
64 (2): 147 - 173.
JEL Classification
O24, 040, N47, F16, D30
