Globalization and inequality in the Arab region

Type Working Paper
Title Globalization and inequality in the Arab region
Publication (Day/Month/Year) 2003
The paper investigates the effect of globalization on the Arab region. Understanding the process of globalization as increased
international economic integration three measures of globalization are used: the rate of increase of trade/GDP ratio; the ratio
of the stock of foreign direct investment to GDP; and the number of immigrants to the US. Inequality in the distribution of
income is looked at in terms of the average income of the poor and the Gini coefficient. It is shown that (a) the Arab region
has been left out of the process of globalization; (b) despite the problems involved in getting high quality data on income, or
expenditure, distribution, there is evidence to show that the Arab region boasts a fairly high degree of income inequality; (c)
the time trend of the degree of inequality in Arab countries, however, remains problematic with official data showing that
inequality has declined over the 1990s decade; (d) the Arab poor, appropriately defined, stand to benefit from trade induced
economic growth by about 50 percent of the increase in per capita income; and (e) there exists preliminary evidence of a
direct causal link between globalization as measured by FDI/GDP ratio and immigration to the USA in such a way that FDI
increases inequality while immigration reduces it. Increased trade participation does not seem to affect inequality.

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