Income Inequality And Import Demand

With the openness degree of countries deepening in recent years and the income inequality widening, income inequality research under open conditions become the hot spot in the field of international economics. Foreign trade and the relationship of the income inequality has also become highly topical issue of domestic and foreign scholars. Decades after the World War Ⅱ, international trade has been rapid development. Developed countries have come into the information society from industrial society; some of the less developed countries and regions have entered the ranks of the increasingly developed;a number of developing countries and regions gradually catch up. It has formed an economic landscape with multi-level coexist and racing to develop. At the same time,global trade imbalance continues to expand, namely, the coexistence of the large current-account surplus of emerging market economies (China as the representative) and the huge deficit of the developed countries (the United States as the representative). Most scholars only concerned about the impact of international trade on the income inequality, while ignoring the income distribution impact on international trade. Based on the ground, this paper studies the influence of income distribution inequality on a country’s import demand so as to provide a possible explanation for this structural imbalance of global trade, which is of importance to current global imbalance research.This paper first reviews the theoretical research and empirical research on income distribution inequality and international trade relations. Secondly, it describes global income inequality and import status quo,and analyzes the correlation between the income inequality and import demand. Then, it describes the impact mechanism of income inequality on import demand and establishes an appropriate theoretical model. Further, this paper conducts an empirical analysis on payment imbalance, using multinational empirical panel data. Finally, on the basis of the empirical results, it puts forward the path choice as to how to adjust the international payment imbalance and how this can be applied in our country.This paper finds that the income inequality has a significant impact on a country’s import demand and it is a main factor affecting the trade imbalance. The empirical results show that:in the low-income countries,the expansion of income inequality degree will lead to the reduction of the country’s import demand. On the contrary, the expansion of inequality will increase the import demand in high-income countries. The empirical results show that, if this structure of income distribution does not change in the short term, it can be reasonably expected that the coexistence of trade surpluses accumulation in emerging economies and deficit in developed countries still be maintained.