The Social Impact of Globalization in the Developing Countries

28 Pages Posted: 26 Jan 2006

See all articles by Eddy Lee

Eddy Lee

International Labour Organization (ILO)

Marco Vivarelli

Universita Cattolica del Sacro Cuore, Milano; IZA Institute of Labor Economics

Date Written: January 2006

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

JEL Classification: F02, O1

Suggested Citation

Lee, Eddy and Vivarelli, Marco, The Social Impact of Globalization in the Developing Countries (January 2006). IZA Discussion Paper No. 1925. Available at SSRN: https://ssrn.com/abstract=878329

Eddy Lee

International Labour Organization (ILO) ( email )

Route des Morillons 4
Geneva, 1211
Switzerland

Marco Vivarelli (Contact Author)

Universita Cattolica del Sacro Cuore, Milano ( email )

Largo Gemelli 1
Milano, 20123
Italy

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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