Publications  Income Distribution



3. Exporting manufactured goods  3 at a high rate, in contrast, is assumed to be favorable to an egalitarian distribution for two reasons. First, such exports usually are competitive in the world market only if produced by labor intensive industries [Chenery and Syrquin (1975)]. The consequent increase in demand for labor will raise wages. Second, economies competing in world markets may have fewer price distortions than those emphasizing import substitution and therefore generate fewer windfall gains for the rich [Papanek (1978)]. 'Contrary to these arguments, generally based on the experience of East Asia, in our regressions a high rate of manufactured exports has no significant effect on equality. A plausible explanation is that some countries have achieved exports of manufactured goods by indirect subsidies quite as large as those provided to import substituting industries, with comparable distortions in factor and product markets.


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