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This paper inquires into the root causes of global imbalances from an international trade perspective. The purpose of the paper is to establish a conceptual framework that links financial market governance, international trade and financial market integration, and to derive implications for the global financial crisis.

In order to analyze global imbalances, the paper draws on a theoretical Heckscher‐Ohlin‐Samuelson international trade model, in which it compares two open economies, solely differing in their financial market governance structures. Building on these findings, the paper extends the analysis to the role of financial market frictions in propagating global imbalances into excessive lending in high‐income economies.

To that extent, it argues that global imbalances are due to impasses in international production. This paper argues that countries seeking to suppress real appreciation have engaged in financial repression, which has, via financial globalization, translated into excessive expansion of financial service sectors in flexible market economies.

In order to derive a tractable framework, the abstract from inter‐temporal aspects and from an in‐depth analysis of financial modelling issues. Owing to the static nature of the set‐up, the analytic link between global imbalances and the global financial crisis is intuitive.

Given that differences in national financial market governance influence the direction of international capital and trade flows, it argues for more international policy coordination in preventing future crisis.

The unique feature of the contribution is that it links financial market governance and international trade to international financial market integration in a tractable theoretical framework.

Introduction The transformation function for two‐sector production models has been used extensively in the international trade and general equilibrium literature. It has been derived both graphically and mathematically from individual sector production functions that are assumed to be linearly homogeneous. The result has been a convex set possessing first derivatives that have frequently been used. However, there seems to be a lack of research on further properties attributable to the transformation function. The purpose of this paper is to analyze these additional properties. We begin by proving that the transformation function is linearly homogeneous in all of its arguments. We then derive the standard first derivatives of the transformation function providing their usual economic interpretation. Finally, we conclude by deriving and interpreting the second‐order derivatives of the transformation function.

Brazil, a large developing economy whose main exports consist of primary commodities, benefited greatly from the boom in commodity prices during the first decade of the current century. However, with a large share of its population with low and very low incomes, there is a potential for some adverse redistributive effects. The purpose of this paper is to address this issue by simulating the ex ante effects using a mixed endogenous–exogenous social accounting matrix (SAM) price model.

The methodology consists of two parts. First, using a mixed endogenous–exogenous SAM price model, the authors obtain the elasticities of domestic prices (goods, services and factors) in response to the increase in international prices of three types of commodities: agricultural, oil/gas and minerals. Second, the authors run micro-simulations at the household level on welfare effects, as well as on some distributive indices. Analysis at the regional level is also carried out.

Following increases in the international prices of primary commodities, the responses of internal prices (goods, services and factors) mean a welfare loss all over the entire distribution of household per capita expenditure; the least affected are those households at the low end and around the median of the distribution. However, the differences among households are not very important. Moreover, once we take into account government transfers and payments from social security, the magnitude of the effects reduces even further. Also, inequality indices and poverty rates show little responsiveness to the simulated shocks. Finally, poorer regions are the most likely to be affected, but also the distribution of effects across households shows differences between regions.

Economies with comparative advantages in the production of primary commodities can benefit at a macro-level from the increase in the international prices of such commodities. However, when a large part of the population spends a high proportion of its income on goods whose prices may be affected by the increase in commodity prices, there is a room for some undesirable effects from a redistributive standpoint. This study provides valuable results about such potential effects for Brazil, a large developing economy.

This paper aims to strive to model virtual trade resulting from time zone differences in an otherwise Heckscher–Ohlin set up which is absent in the literature. So, the paper adds some value to the existing literature on time zones (TZ) and trade.

A competitive general equilibrium model is developed first to capture the effect of TZ differences on virtual trade. Then the authors examine, in brief, if distance can be accommodated in such framework. Finally, the authors extend the model to incorporate informality.

It is seen that exploitation of time zone difference benefits skilled labor and hurts capital under reasonable assumption. In what follows, time zone difference exploiting sector expands, whereas the other sector contracts. Then, the model has been extended to examine how distance may also lead to similar outcomes. In addition, the model is further modified to explore the effect of virtual trade in an informality and associated extortion ridden economy. Interestingly, virtual trade turns out to be beneficial to unskilled workers as well, and leads to a fall in the number of extortionists, though informal production is augmented.

This model is a competitive model that may not clearly reflect the realistic world. However, interestingly this may form the basis of looking into some other appealing dimensions of the real world.

TZ and related communication-cost-driven trade arguments are relatively less explored theoretically. Therefore, the work adds some value to the theoretical understanding of outsourcing in service trade that uses day-night differences across the globe.

The dissolving trade barriers, financial deregulation, hyper‐mobility of capital and the rapid diffusion of new information technologies have ushered the Australian economy into the borderless world. The orthodoxy that states that centralised wage‐fixing in Australia has impeded wage flexibility and resulted in high unemployment is unconvincing. Partly, this is because in the 1980s Australian labour market institutions have been decentralised and decollectivised in response to pressures from the borderless world. The insights garnered from cross‐sectional comparative statics that, first, skill‐biased Schumpeterian technological change was the major cause of labour immiserisation and, second, adverse Stolper‐Samuelson trade played an insignificant effect need to be reviewed. Parsimonious dynamic time‐series models of trade and technology have been formulated using general‐to‐specific methods after taking account of stochastic trends through unit root and cointegration tests. Granger causality and non‐nested tests applied to these models support the contention that both trade and technology contributed to increasing wage disparity during the borderless era. Moreover the supply side factors such as female participation, immigration and institutional factors such as deunionisation have also increased wage disparity. The deregulation of the Australian labour market by the Workplace Relations Act, whilst an inevitable response to achieve competitiveness in the borderless world market, would exacerbate wage inequality. Policies aimed at skill accumulation on the one hand, and social welfare policies involving negative income taxes on the other may have to be implemented to mitigate the deleterious social effects of rising wage inequality.

This paper aims to examine the relationship between trade liberalization and wages in India.

This paper uses an empirical approach based on the “mandated wage equations”.

The main result in the paper is that trade reforms have been associated with a rise in the relative wages of medium‐skilled workers (defined as having completed secondary schooling). The authors do not find any evidence for trade reforms to be associated with an increase or decrease in wage inequality between low and high‐skilled workers. The results are consistent with the predictions of the Stolper‐Samuelson theorem.

The main contribution of this paper is to add to the debate on trade reforms and inequality in India by focusing on the variation in skill categories.

The relationship between globalization – through trade liberalization – and inequality is unclear. The Stolper‐Samuelson theorem, which is a standard result in trade theory, does not offer compelling answers as globalized economies with an abundance of unskilled labour have seen inequality both worsen, as in China and much of Asia, and improve, as in Latin America. Kuznets' classic model also finds scant confirmation in increasingly open economies, with growth associated with declining inequality in poorer Latin America, and with rising inequality in richer OECD countries. The authors aim to suggest that the key to those anomalies lies in the relative weight of industrialization in a country's growth mix.

Using census data (for 1991 and 2000) for more than 5,000 municipalities, the authors examine the relationship between income per capita and inequality in Brazil.

The authors uncover the existence of an “inverted‐U” relationship in 1991 that flipped into a “straight‐U” relationship in 2000, both of which are statistically significant. They argue that the flip results from the association of economic growth with de‐industrialization that is driven by globalization.

In terms of future work, there is a need to examine further the role of de‐industrialization, not only in the case of Brazil but also other emerging economies with different patterns of inequality than the ones currently observed in Latin America and Brazil in particular.

The authors' result reinforces the growing skepticism towards the role of industrialization in economic development, as Brazil sees its most successful period of pro‐poor growth go hand in hand with its de‐industrialization.

The authors' result casts doubts about the role of social policy in the current evolution of inequality and poverty in Brazil. The famous Bolsa Familia program, in particular, may have been exaggerated by both the Brazilian government and social policy specialists, as much of the change could be traced to changes in the structure of the economy itself.

This paper contributes to the existing literature on globalization and inequality. It uses municipal level data and identifies a “flip” in the Kuznets relationship. This enables us to make sense of growing inequality in poorer but industrializing economies and in rich ones going through processes of de‐industrialization, and also of declining inequality in poorer de‐industrializing countries such as Brazil.

The purpose of this paper is to examine the impact of three modes of globalization, i.e. trade globalization, financial globalization and technological globalization, separately on income inequality on the Asian emerging economies.

The study uses Hecksher–Ohlin and the Stolper–Samuelson theorem as a theoretical model for the relationship between globalization and income inequality. The study uses pooled least square (POLS) and instrumental variable least square (IVLS) estimation technique but prefers the IVLS over POLS due to the problems of omitted variable biased and endogeneity. Due to unavailability of data for all the Asian emerging economies, the study uses the following 11 countries, i.e. Bangladesh, China, India, Indonesia, Malaysia, Pakistan, Philippines, Sri Lanka, Singapore, South Korea and Thailand, from 1980 to 2014 for the trade and technological globalization model and from 1990 to 2014 for the financial globalization model.

Trade globalization significantly contributes to reduce income inequality in the Asian emerging economies. The impact of financial globalization on income inequality suggests that financial integration causes an increase in income inequality. Therefore, the benefits of financial globalization are not evenly distributed among the rich and the poor. The impact of technological globalization significantly contributes in the reduction of income inequality.

Government has to invest in research and development activities, establish efficient financial system, reduce trade restrictions and provide subsidies that help to increase the volume of trade.

This study contributes in the existing literature by analyzing the impact of trade globalization, financial globalization and technological globalization on income inequality in Asian emerging economies. The study provides useful guidelines to policy makers and governments to make effective policies in relation to globalization and income inequality that lead toward economic growth and reducing income inequality.

The purpose of this paper is to examine the relationship between gender wage gap, productivity level of labor force and international trade for a sample of 13 developing upper-middle income countries over the period 2001 to 2015.

According to different statistical tests such as F-Limer test, the proper method for estimating this model is panel regression analysis. The Hausman test was handled to realize the fixed or random effect characteristics of this data. The final result of this test shows that the data follow some kind of random behavior which makes the panel regression model, random effect a suitable method for estimating this data.

The regression results showed that women’s (and men’s) employment in this sample has a positive relationship with their wages. Results showed that labor force’s productivity level affects their wage, and therefore, productivity difference between women and men is impressive on the gender wage gap. The significant finding is about international trade. While international trade has a positive effect on the wage rate of both genders, this effect is stronger for the female labor force. As a result of a stronger effect of international trade on the female labor force, a negative effect of international trade on the gender wage gap is observed.

Productivity variables are not available for this sample countries, so the author creates a new variable which is going to be used as a proxy for productivity. The author divides value added in each section (Agriculture, Manufacture, Industry, Service) by the total number of employees in that section; then for calculating the productivity rate of women, the author multiplies the result by the percentage of the employed women in that sector; for the productivity of men in that sector, the author multiplies the result by the percentage of men employed in that sector.

This paper contributes to the available studies by selecting a new sample of developing countries with upper-middle income level and also by introducing a new variable which is useful for measuring labor force productivity level.

Considers a systems model of changes in industrial structure, employment and income levels. A country subsidizes imported resources to augment its existing resource base and to develop an export promotion strategy. This is leveraged with borrowed money. According to neo‐classical economic theory, factors of production are paid in proportion to their output contribution. Economic growth occurs when the return from a higher rate of factor utilization exceeds the cost of subsidization. In the study of ordinary differential equations, simultaneous changes in variables can be treated as part of a dynamic system subject to constraints. At any moment resources are fixed, and we may assume D'Alembert's principle of virtual work with respect to the internal constraints of the system. Subsidized economic growth shares a paradigm with analytical dynamics, the stability of motion around the neighbourhood of a singular point. The classical analytical‐topological methods which describe asymptotic stability are used to investigate economic policy.