The effect of within-country inequality on international trade and investment agreements
A new paper co-authored by Professor Peter J. Buckley on within-country inequality, international trade and investment agreements has been published in the <i> International Business Review.</i>
Professor Peter J Buckley and Professor Niron Hashai provide novel empirical evidence demonstrating that greater within-country inequality, a proxy for 'perceived losses' from globalisation, decreases countries' propensity to sign regional trade and investment agreements in their paper. The findings support the argument that the existence of 'losers' from globalisation can be detrimental for continued globalisation.
To the best of the authors’ knowledge, this is the first extensive econometric empirical evidence of the influence of within-country inequality on countries' willingness to sign international trade and investment agreements, as means to increase their global economic integration.
The paper highlights that:
- Higher levels of within country inequality result in fewer signings of future international trade and investment agreements
- Those perceiving themselves as losing from international trade and foreign investments are effective in forming interest groups that pressure policy makers to reduce openness to globalisation
- Policy makers respond to such pressures by reducing the future signings of international trade and investment agreements
- Multinational corporations that typically benefit from increased globalisation need to devise strategies to reduce within-country inequality in order to reduce resistance to their operations
Hashai, N., & Buckley, P. J. (2021). The effect of within-country inequality on international trade and investment agreements. International Business Review, 101862.