Edited by Jonathan Michie
Chapter 7: National Inequality in the Era of Globalisation: What do Recent Data Tell Us?
* José Gabriel Palma 1 Introduction The issue of the effect of greater international economic and financial integration on national and international income distribution has always been particularly controversial in economic theory. For example, as soon as Samuelson developed his trade-related factor-price-equalisation theorem (1948–49) – that an increase in trade should have a positive effect on both international and national distribution of income (the latter because an export expansion should increase the relative income of the [cheap] abundant factor and reduce that of the [expensive] scarce factor in each country) – it immediately became one of the most debated hypotheses in trade and development economics. And now, many years later, the issues addressed in the Samuelson theorem are again at the core of the globalisation debate on the effects that the globalisation-induced increase in trade and international economic and financial integration would have on national and international income distribution and factor movements.1 In fact, of all of Samuelson’s economic hypotheses, there is probably none that has influenced US foreign policy today as much as the one that postulates that an increased level of trade between countries should reduce the incentive for labour to move across frontiers. In the case of its relationship with Mexico, for example, following the 1982 ‘debt crisis’ the US – always frightened that worsening economic problems in Mexico could turn the usual flow of Mexican immigrants into a tidal wave – gave Mexican exports increasingly preferential access to its market, a process that led to the creation of NAFTA.2 As...
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