Trade Liberalization and Income Inequality in Developing Countries

Abstract

This paper explores the relationship between trade liberalization and income inequality in developing countries. Using panel data from 50 nations over 20 years, the research evaluates how reductions in tariffs, import quotas, and trade barriers affect income distribution among different socioeconomic groups. Results show that while trade liberalization increases overall economic growth and exports, it can exacerbate inequality if complementary policies such as education, social safety nets, and labor market reforms are not implemented. The study highlights the need for balanced trade policies that promote equitable growth and sustainable development. Insights from this research are valuable for policymakers and economists seeking to design inclusive trade strategies in emerging markets.