Chris Papageorgiou, Subir Lall, and Florence Jaumotte
Publisher:
INTERNATIONAL MONETARY FUND
Published Date:
July 2008
DOI:
http://dx.doi.org/10.5089/9781451870435.001
ISBN:
9781451870435
ISSN:
1018-5941
Page:
36
We examine the relationship between trade and financial globalization and the rise in inequality in most countries in recent decades. We find technological progress as having a greater impact than globalization on inequality. The limited overall impact of globalization reflects two offsetting tendencies: whereas trade globalization is associated with a reduction in inequality, financial globalization-and foreign direct investment in particular-is associated with an increase. A key finding is that both globalization and technological changes increase the returns on human capital, underscoring the importance of education and training in both developed and developing countries in addressing rising inequality.