Trade, resources and inequality in Latin America

Londoño de la Cuesta, Juan Luis

2002-12

LC/G.2187-P

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This article uses international databases to empirically estimate the links between inequality and trade. It looks first at the links between trade openness, income distribution and relative factor abundance. Next, it uses the results obtained to analyse the changing relative resource endowment of Latin America and its distributive consequences. The main conclusion is that, behind the persistent high level of inequality in the region, substantive changes have been taking place. The Latin American pattern of relative resource abundance has changed with the inroads made by Asia, China and Russia into global trade, which have reduced Latin America's relative abundance of unskilled labour and resources, respectively. The developed countries have expanded their endowment of fixed capital, while Latin America has not been able to accumulate the physical and human capital that would make a stronger emphasis on external trade compatible with greater income equity.

Includes bibliography

TRADE LIBERALIZATION; REGIONAL DISPARITIES; FREE TRADE; INCOME DISTRIBUTION; ECONOMIC GAP; LIBRE COMERCIO; DISTRIBUCION DEL INGRESO; LIBERALIZACION DEL INTERCAMBIO; DISPARIDAD ECONOMICA; DESIGUALDADES REGIONALES;