infonet-economy

Abstract This paper studies the linkages between international openness and «inclusive growth», understood as better access to productive employment and entrepreneurship, the reduction of poverty and a more equal income distribution. It introduces the notion of «inclusive trade» as the linkages through which international integration can contribute to inclusive growth. Four dimensions of potential linkages are analysed, namely: (i) aggregate employment and its distribution, (ii) aggregate productivity, (iii) poverty and income inequality, and (iv) equal opportunities.

Abstract A literature review covering each of these four dimensions lays the foundation for own empirical work. Using aggregate data from the Asia-Pacific region for 1988 to 2010, the analysis provides evidence for a beneficial role of foreign direct investment (FDI) in the inclusiveness of economic growth as FDI stocks are positively associated with its three employment-related dimensions. The role of international trade is less pronounced. Increased export orientation seems to be a boon to productivity growth in the medium-term, while increased import penetration coincided with poverty alleviation and smaller income inequality.