Globalisation, income inequality and poverty relationships: evidence from Mexico, Indonesia, Nigeria and Turkey

Abstract

Purpose

The study examines the dynamic relationship among globalisation, income inequality and poverty in Mexico, Indonesia, Nigeria and Turkey (MINT countries) between 1980 and 2018.

Design/methodology/approach

A Bayesian vector autoregressive (BVAR) approach is used as a technique of estimation hanging on the fact that the method uses prior distribution for the estimated parameters.

Findings

The results show that globalisation is a strong predictor of itself in all the MINT countries only in the short run. In the long run, income inequality and poverty strongly influence globalisation, respectively, in Indonesia and Turkey, while globalisation still has more impact on itself in Nigeria. Income inequality has a strong endogenous impact on itself in Mexico and Indonesia over the time horizon, whereas globalisation and poverty are strong predictors of income inequality in the long run in Nigeria and Turkey, respectively. Also, poverty strongly influences itself in all the MINT countries in all the periods, meaning that poverty begets itself in all the MINT countries, except for Indonesia in the long run.

Practical implications

The study suggests that all the MINT countries should ensure political stability and a strong institutional framework to gain from the process of globalisation and to experience reductions in the levels of income inequality and poverty.

Originality/value

This study is distinct from other studies in the sense that an overall globalisation index (GBI) as used by Dreher et al. (2008) is used for the globalisation variable, and the Multidimensional Poverty Index (MPI) is used to capture poverty in all the MINT countries. Also, the research paper uses a BVAR approach as against the classical VAR, and this helps in solving over-fitting problems.

Citation

Osinubi, T.T. and Olomola, P.A. (2021), "Globalisation, income inequality and poverty relationships: evidence from Mexico, Indonesia, Nigeria and Turkey", Journal of Economic and Administrative Sciences, Vol. 37 No. 2, pp. 179-208. https://doi.org/10.1108/JEAS-01-2020-0006