The Social Impact of Globalization in the Developing Countries

Eddy Lee () and Marco Vivarelli ()
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Eddy Lee: ILO, Geneva

No 1925, IZA Discussion Papers from Institute for the Study of Labor (IZA)

Abstract: In this paper an ex-post measurable definition of globalization has been used, namely increasing trade openness and FDI. A general result is that the optimistic Heckscher- Ohlin/Stolper-Samuelson predictions do not apply, that is neither employment creation nor the decrease in within-country inequality are automatically assured by increasing trade and FDI. The other main findings of the paper are that: 1) the employment effect can be very diverse in different areas of the world, giving raise to concentration and marginalisation phenomena; 2) increasing trade and FDI do not emerge as the main culprits of increasing within-country income inequality in DCs, although some evidence emerges that import of capital goods may imply an increase in inequality via skill-biased technological change; 3)increasing trade seems to foster economic growth and absolute poverty alleviation, although some important counter-examples emerge.

Keywords: trade; FDI; employment; poverty; within-country income inequality (search for similar items in EconPapers)
JEL-codes: F02 O1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int and nep-sea
Date: 2006-01
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