Distributional Consequences of Globalization: Is Organization of the Islamic Conference Countries Different?

Abstract

This article investigates distributional effects of globalization using new comparable panel data for Organization of the Islamic Conference (OIC) and non-OIC developing countries from 1965 to 2010. The results show that the Kuznets Curve does not exist in OIC countries, while it holds in non-OIC countries. International trade tends to widen income inequality in OIC countries while it helps to ameliorate inequalities in non-OIC countries. Financial development decreases inequality only in OIC countries. The study concludes that OIC countries are different from non-OIC countries in their exposure to globalization.

KEYWORDS:

• FDI
• globalization
• inequality
• poverty
• OIC countries

ACKNOWLEDGMENTS

This study has benefitted from the comments received from a presentation at the 9th International Conference on Islamic Economics and Finance, organized by the International Association of Islamic Economics, at WoW Convention Centre, September 9-10, 2013, Istanbul, Republic of Turkey. I am thankful to the conference organizers for providing a travel grant to present this work. This is to acknowledge that this work also has benefited from the comments received from Professor Ronald MacDonald, Dr. Alberto Palnoi, and Dr. Luis Angelese.

Notes

¹ The Organization of the Islamic Conference (OIC) is the second largest inter-governmental organization after the United Nations, which has membership of 57 states spread over four continents.

² http://www.sesric.org/publications-detail.php?id=159

³ The terms financial development and financial intermediation are used alternatively. Financial development is measured using two indicators: credit and money supply as percentage of GDP.