UNCTAD Working Papers

This study examines United States import diversification patterns between 2017 and 2022. It finds that import diversification from China was of a larger magnitude and scope compared to other countries. The study shows that the magnitude of the decline in China's market share across various sectors was mainly influenced by trade policy changes and industry characteristics. The analysis also examines trade diversion effects, which have benefited some countries' exports, finding that these effects were largely driven by the United States' trade policy stance and the economic competitiveness of those countries. In recent years, geopolitical tensions, trade disputes, logistics challenges, and global pandemics have fuelled discussions on supply chain resilience. A common narrative arising from these events has been the need to mitigate risks stemming from potential trade policy changes and supply chain disruptions. A substantial part of this narrative has focused on the United States of America and China because of their strong trade relationship, shifts in their trade policy stance1, and supply diversification strategies. The substantial change in United States import patterns from China provides a valuable opportunity to examine the outcomes and drivers of supply diversification strategies. This analysis is important for both policymakers and businesses, offering empirical insights into how global trade relationships are evolving.

This paper empirically explores the relationship between export diversification and income inequality. Using a sample of 182 countries from 1998 to 2018, the study employs a fixed effects model to examine the interaction between diversification and inequality. The results show a statistically significant linear positive association between export diversification and income inequality. The study also finds heterogeneity in the association across income and commodity-dependence groups, with the result holding in the subsamples comprising low-income, and commodity-dependent developing countries. The results remain significant to a series of robustness checks. This suggests that while export diversification is associated with rising income, it may initially benefit specific groups, leading to higher inequality. The paper emphasizes the importance of inclusive policies to ensure that the benefits of diversification extend to vulnerable groups from an early stage; it proposes recommendations for governments to promote inclusive diversification efforts.

Research and data indicate that wealth inequality is more concentrated than income inequality and that there is a high correlation between both variables. Yet, most empirical studies on the determinants of economic inequality focus on income and not wealth inequality and they rarely examine the nexus between the two variables. Against this backdrop, this paper examines the impact of income inequality on the distribution of wealth using panel data and controlling for the roles of financial inclusion and other potential drivers of wealth inequality. We find evidence that lagged wealth and savings rates increase wealth inequality globally as well as in the developed and developing countries samples. We also find that income inequality and return on deposits are dis-equalizing in developing countries while financial inclusion is equalizing in developed countries. In both the global and developing countries samples, financial inclusion has a negative relationship with wealth inequality, but the coefficients are not statistically significant. The findings of the paper have important policy implications for national efforts to address wealth inequality.

This paper examines the drivers of income inequality within and across countries using relevant measures of inequality and an estimation technique that jointly accounts for both model and estimation uncertainties. The estimations are applied to a global sample and to three categories of vulnerable developing countries: Africa, least developed countries (LDCs), and landlocked developing countries (LLDCs). We find that multiple factors contribute to income inequality within and across countries but that there are significant differences in the key drivers globally and in Africa, LDCs and LLDCs. We also find strong support for the Kuznets hypothesis in the global and the developing countries samples but not in the Africa, LDC and LLDC samples. These differences underscore the need for policymakers to account for country-heterogeneity in the design of policies to combat inequality within and across countries.