The effect of foreign trade on income distribution: OECD countries application

This study aims to examine the effects of foreign trade on income distribution by considering 28 countries selected from OECD countries in the 1987-2021 periods. Today, as globalization and economic integration accelerate, the impact of foreign trade on the economic structures of countries has become an important research topic. In particular, the increase or decrease in injustice in income distribution plays a critical role in evaluating the social and economic consequences of foreign trade policies. The panel data method was used to examine the relationship between foreign trade and income distribution more comprehensively. Stationarity analysis of the variables in the model established in the study (real gross domestic product per capita, openness, capital and Gini coefficient) was performed using Levin-Lin-Chu, Breitung, Hadri, Im- Pesaran-Shin, Fisher-ADF and Fisher-PP unit root tests. has been made. The existence of a long-term relationship between variables was examined with the Pedroni Panel Cointegration test. Finally, the long-term coefficients between the variables were estimated with the Panel FMOLS Model, Panel DOLS Model, Random Effects Model and Fixed Effects Model. The findings obtained as a result of the tests can be listed as follows: i) Panel unit root tests applied to the variables show that the examined variables are not stationary at their level values, but are stationary when the first difference is taken. ii) When the Pedroni and cointegration tests were examined, it was determined that there was a long-term relationship between the variables in question. iii) Panel FMOLS and panel DOLS model, Random Effects and Fixed Effects model have shown that the increase in real gross domestic product per capita will deteriorate the income distribution, while capital and openness variables will improve the income distribution.