Exports and Income Distribution: Is There a Kuznets Curve?

• Published in: International Journal of Empirical Economics 2022-12, Vol.1 (4)
• Main Authors: Yuhn, Ky-hyang, Venturelli, Henry
• Format: Article
• Language: English
• Subjects: economic development; Economic theory; Exports; globalisation; Income distribution; income inequality; Income per capita; Kuznets curve; Per capita
• ISSN: 2810-9430; 2810-9449
• DOI: 10.1142/S2810943022500159

This study investigates the effects of exports on income per capita using a panel data set of 150 countries from 1990 to 2012. We have found that exports have differing effects on income distribution depending on different phases of economic development. As exports (measured as the percent of gross domestic product (GDP)) increase by a one percentage point, income per capita increases in low-income countries with an annual level of income per capita up to $5,000, but as a country’s income per capita increases beyond that level, the marginal effect of exports on income per capita becomes negative. The negative effect is strongest in middle-income countries with an annual level of income per capita between $5,000 and $10,000. Thus, our finding confirms the existence of a Kuznets curve in the relationship between exports and income distribution. We have further found that an increase in exports lead to an increase in income per capita until a country’s exports reach approximately 28% of GDP, after which a further increase in exports leads to a decrease in the marginal effect of exports on income per capita. We can conclude that exports benefit poorer countries more than richer countries.