The Effect of Trade Openness on Income Inequality Selected Latin American Countries

The importance of trade openness has increased after 1990s, too many countries adopted more trade open policies to improve their economies and to improve their population's living standards. At the same period, the importance of the inequality among people has also increased which was and still a topic of interest. The aim of this study is to find out the impact of trade openness on income inequality within five countries of Latin America. In other words, does trade openness have a statistically significant effect on income inequality or not? The results of the study showed that trade openness had a statistically significant negative effect on income inequality. Moreover, the unemployment had a statistically significant negative effect on income inequality while the ideology of the government had also a statistically significant effect on income inequality with a positive effect. At last, the inflation had no a statistically significant effect on income inequality. Keywords: Trade openness, Income inequality, Heckscher-Ohlin theory, Globalization, and the Ideology of government