From Trade-Off to Win-Win! Prudent Policy or Coincidental Conditions for Latin American economies
(2014) EKHM52 20141Department of Economic History
- Abstract
- Many Latin American economies benefited greatly from increasing international trade and an unprecedented commodity boom in the dawn of the 21st century. At the same time the region successfully reduced the prevailing income inequality, apparently without compromising economic growth. These events seem to challenge the common belief of economists, who proclaim the mutual exclusiveness of growth promoting measures and inequality reducing policies. They also contrast the trends of rising income disparities in the western world, as famously expressed by Thomas Piketty (2014).
Given Latin America’s long and burdensome history of high income inequality, the recent changes are untypical, which made the region a popular subject for research of... (More) - Many Latin American economies benefited greatly from increasing international trade and an unprecedented commodity boom in the dawn of the 21st century. At the same time the region successfully reduced the prevailing income inequality, apparently without compromising economic growth. These events seem to challenge the common belief of economists, who proclaim the mutual exclusiveness of growth promoting measures and inequality reducing policies. They also contrast the trends of rising income disparities in the western world, as famously expressed by Thomas Piketty (2014).
Given Latin America’s long and burdensome history of high income inequality, the recent changes are untypical, which made the region a popular subject for research of economic inequality. While, numerous scholars tried to explain the relationship between economic growth and income inequality, this study primarily focuses on the impact of international trade on this very relationship. The contemporary case of Latin America fits this purpose greatly and is above all fascinating due to its historical properties in respect to income inequality. Moreover recent events in Latin America may indicate the beginning of a “win-win scenario” in which economic growth and reduced income inequality do not necessarily exclude each other. Admittedly the scenario is yet hypothetical as only the future will show if a sustained “win-win” trend occurs. However, with descriptive statistics and panel data regressions this study investigates if the increased commodity trade may have triggered the alleged regime change to a “win-win scenario”. The impact of changes in the commodity terms of trade on the ratio between social expenditures and GDP are analyzed in detail to get a better understanding of trade’s impact on income disparity. The results show that an increase in international trade is unlikely to be the sole culprit for reduced income inequality in Latin America. For the alleged change in the relationship between income inequality and economic growth, international trade cannot be held responsible either. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/4814586
- author
- Hagen, Sven LU
- supervisor
- organization
- course
- EKHM52 20141
- year
- 2014
- type
- H2 - Master's Degree (Two Years)
- subject
- keywords
- International Trade, Latin America, Inequality, Economic Growth
- language
- English
- id
- 4814586
- date added to LUP
- 2014-11-27 12:05:49
- date last changed
- 2014-11-27 12:05:49
@misc{4814586,
abstract = {{Many Latin American economies benefited greatly from increasing international trade and an unprecedented commodity boom in the dawn of the 21st century. At the same time the region successfully reduced the prevailing income inequality, apparently without compromising economic growth. These events seem to challenge the common belief of economists, who proclaim the mutual exclusiveness of growth promoting measures and inequality reducing policies. They also contrast the trends of rising income disparities in the western world, as famously expressed by Thomas Piketty (2014).
Given Latin America’s long and burdensome history of high income inequality, the recent changes are untypical, which made the region a popular subject for research of economic inequality. While, numerous scholars tried to explain the relationship between economic growth and income inequality, this study primarily focuses on the impact of international trade on this very relationship. The contemporary case of Latin America fits this purpose greatly and is above all fascinating due to its historical properties in respect to income inequality. Moreover recent events in Latin America may indicate the beginning of a “win-win scenario” in which economic growth and reduced income inequality do not necessarily exclude each other. Admittedly the scenario is yet hypothetical as only the future will show if a sustained “win-win” trend occurs. However, with descriptive statistics and panel data regressions this study investigates if the increased commodity trade may have triggered the alleged regime change to a “win-win scenario”. The impact of changes in the commodity terms of trade on the ratio between social expenditures and GDP are analyzed in detail to get a better understanding of trade’s impact on income disparity. The results show that an increase in international trade is unlikely to be the sole culprit for reduced income inequality in Latin America. For the alleged change in the relationship between income inequality and economic growth, international trade cannot be held responsible either.}},
author = {{Hagen, Sven}},
language = {{eng}},
note = {{Student Paper}},
title = {{From Trade-Off to Win-Win! Prudent Policy or Coincidental Conditions for Latin American economies}},
year = {{2014}},
}