similar effect on wage inequality. The results suggest, in fact, that this is not the case. 1. Introduction The impact of globalisation on wage inequality has attracted considerable attention (see, for example, Anderson, 2005; Desjonqueres, Machin, & Van Reenen, 1999; Haskel & Slaughter, 2001; Katz & Murphy, 1992).For the most part, these studies have focused on using changes in the pattern of world trade to explain increasing wage inequality in developed economies. In general, trade liberalisation is found to increase wage inequality, as basic trade theory would predict, though the impact is not especially strong. Those studies that have examined the consequences of globalisation for wage inequality in emerging economies have been generally limited in their regional coverage, with a focus primarily on Latin America (Arbache, Dickerson, & Green, 2004; Beyer, Rojas, & Vergara, 1999; Galiani & Sanguinetti, 2003; Gonzaga, Filho, & Terra, 2006; Pavcnik, Blom, Goldberg, & Schady, 2004). Moreover, the consistent finding that comes from these studies is that trade liberal- isation is found to also increase wage inequality. This contradicts the tenet of basic trade theory according to which trade liberalisation reduces wage inequality in those countries with low-skilled labour-abundant economies (Stolper & Samuelson, 1941). Of course, globalisation is not one dimensional and can operate in other ways than through relative prices following the freeing up of trade flows (Anderson, 2005; Goldberg & Pavcnik, 2007). In particular, the role of skill-biased technology transfer between developed and developing countries associated with an increase in foreign direct investment has been proposed as a reason for the observed increase in wage inequality in the latter (Acosta and Gasparini 2007; Behrman, Birdsall, & Szekely, 2003; Feenstra and Hanson 1996). The focus on Malaysia is especially interesting in the context of the current literature. Malaysia has been described as one of East Asia ’ s “ economic miracles ” (UNDP, 2006) recording high economic growth rates for over 40 years. Importantly, Malaysia ’ s economic performance has been associated Correspondence Address : Dr Rusmawati Said, Faculty of Economics and Management, Universiti Putra Malaysia, 43400 Sedang, Selangor, Malaysia. E-mail: [email protected] The Journal of Development Studies , 2013 Vol. 49, No. 8, 1118 – 1132, © 2013 Taylor & Francis Downloaded by [Moskow State Univ Bibliote] at 04:44 22 October 2013
with a more market-oriented industrialisation strategy and, in particular, a commitment to an open trade policy regime (Athukorala, 2005; Athukorala & Menon, 1999). Malaysia ’ s development strategy represents a very different approach to that followed by many other emerging economies, including those where more recent trade liberalisation has been found to increase wage inequality (Sachs & Warner, 1995). It is relevant, therefore, to consider whether this long-term commitment to openness in international trade has resulted in a similar consequence for wage inequality in Malaysia.
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