Jurnal Ekonomi Malaysia
56 (3) 2022 11 – 27
School of Business
Monash University Malaysia
46150 Bandar Sunway, Selangor, MALAYSIA
School of Business
Monash University Malaysia
46150 Bandar Sunway, Selangor, MALAYSIA.
School of Business
Monash University Malaysia
46150 Bandar Sunway, Selangor, MALAYSIA
Abstract
Within-country inequality is on the rise in many Asian countries despite rapid educational expansion, poverty reduction and export-driven macroeconomic growth. This trend raises questions about the role and effectiveness of governments in redistributing income and wealth. Therefore, our study re-examines the effects of trade openness and educational attainment on income inequality while additionally investigating the role of governance on several dimensions. The study is conducted on nineteen Asian economies for the period 1990-2019. Methodologically, we follow Generalised Methods of Moments using dynamic panel procedures to improve previous efforts to examine the trade-inequality relationship. We hypothesize that good institutions can generate better distributional outcomes in terms of foreign trade and educational attainment. To test this, aggregate measures of institutions on five dimensions of governance – government stability, corruption, law and order, democratic accountability, and bureaucratic quality are incorporated into the empirical model. Our empirical results reveal that controlling for the country’s income level, increasing trade openness and overall improvements in institutional quality contribute to reducing income inequality in the Asia-Pacific region. However, educational attainment has an inequality-widening effect during our period of study. We conclude by discussing other possible explanations for rising inequality in the region, and in that context, the role of public policy in ensuring equitable distributions.
Keywords
JEL Codes
References
Abrigo, M.R., Lee, S.H. & Park, D. 2018. Human capitalspending, inequality, and growth in middle-income Asia. Emerging Markets Finance and Trade 54(6): 1285-1303.
Acemoglu, D. & Robinson, J.A. 2006. De facto political power and institutional persistence. American EconomicReview 96(2): 325-330.
Adams, Richard H., Jr.. 2003. Economic growth, inequality, and poverty: findings from a new data set. Policy Research Working Paper: No. 2972. World Bank, Washington, DC.
Agyei, S.K. & Idan, G.A., 2022. Trade openness, institutions, and inclusive growth in Sub-Saharan Africa. SAGE Open 12(2): 1-12
Akyuz, M., Gueye, G.N. & Karul, C. 2022. Long-run dynamics between trade liberalization and income inequality in the European Union: a second generation approach. Empirica 49(5): 1-24.
Alderson, A.S & Nielsen, F. 2002. Globalization and the great U-turn: Income inequality trends in 16 OECD countries. The American Journal of Sociology 107(5): 1244-1299.
Arellano, M. & Bond, S. 1991. Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. The Review of Economic Studies 58(2): 277-297.
Asadullah, M.N., Mansor, N. & Savoia, A. 2021. Understanding a “development miracle”: poverty reduction and human
development in Malaysia since the 1970s. Journal of Human Development and Capabilities 22(4): 551-576.
Asadullah, M.N. & Savoia, A. 2018. Poverty reduction during 1990–2013: Did millennium development goals adoption and state capacity matter? World Development 105: 70- 82.
Asadullah, M.N., Savoia, A. & Sen, K. 2020. Will South Asia achieve the sustainable development goals by 2030? Learning from the MDGs experience. Social Indicators Research 152(1): 165-189.
Asadullah, M.N. & Chaudhury, N. 2015. The dissonance between schooling and learning: evidence from rural Bangladesh. Comparative Education Review 59(3): 447- 472.
Avalos, A. & Savvides, A. 2006. The manufacturing wage inequality in Latin America and East Asia: openness, technology transfer, and labor supply. Review of Development Economics 10(4): 553-576.
Bibliography
@article{koh2022resurgence,
title={The Resurgence of Income Inequality in Asia-Pacific: The Role of Trade Openness, Educational Attainment and Institutional Quality},
author={Koh, Sharon G. M. and Lee, Grace H. Y. and Siah, Audrey K. L.},
journal={Jurnal Ekonomi Malaysia},
volume={56},
number={3},
pages={11—27},
}
Receive updates when new articles are published.