The effects of trade openness on income inequality - evidence from BRIC countries

In the last few decades, a lot of countries opened their economies to trade. And as a result, the share of world trade in world output increased from 33 percent in 1975 to 59 percent in 2013. These same years also witnessed an increasing income gap between developed and developing countries, in addition to income inequality within countries. I look into the relationship between trade openness and income distribution in greater detail in this paper. I conduct my analysis for the BRIC countries, namely, Brazil, the Russian Federation, India, and China. In my analysis, I find that an increase in trade as a percentage of GDP has in fact resulted in the worsening of the income distributions in these countries.