Trade Globalization, Financial Globalization and Inequality Within South-East Europe and CIS Countries

This paper contributes to the empirical literature by investigating trade globalization and financial globalization as channels of inequality within South-East Europe and the Commonwealth of Independent States (CIS) countries from 1992 to 2007. In addition, the paper uses KOF (2010) index to measure the overall impact of globalization on income inequality in South-East Europe and the CIS countries. To overcome the limitations of the least squares dummy variables (LSDV) model, Parks method is used. The paper has two results. The first result is that both trade globalization and financial globalization deepen the income inequality within South-East Europe and the CIS countries. The second result is that the overall impact of globalization have adverse effect on inequality within South-East Europe and CIS countries from 1992 to 2007. These results support the hypothesis that globalization widens the income inequality within countries.