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Trade, infrastructure and income inequality in selected Asian countries: An empirical analysis

Theoretical and empirical works related to international trade are confined to models which have labour and capital as explicit factors of production. Although income inequality and trade openness have been given importance in the literature, the role of quantity and quality infrastructure has barely been investigated in this context. Similarly, growth regressions have highlighted the role of infrastructure and trade openness in economic growth, while inclusive growth has not received much attention. This paper attempts to unravel the interlinkages and interconnections among infrastructure, trade openness and income inequality, using panel data of 14 Asia-Pacific countries at different levels of development. The empirical exercise clearly reveals influence of trade openness and infrastructure on income inequality but the reverse is not necessarily true. Moreover, countryspecific factors turn out to be important determinants of trade openness and income inequality. Further, dynamic panel estimates reveal importance of initial values of both income inequality and trade openness as important determinants in the evolution of these variables, apart from the positive influence of infrastructure as a determining variable...

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