Functional distribution of income as a determinant of importing behavior: An empirical analysis

We exa­mi­ne the impact of the func­ti­o­nal dis­tri­bu­ti­on of inco­me on the demand for imports in deve­lo­ped and deve­lo­ping coun­tri­es. Drawing upon a moti­va­ting accoun­ting struc­tu­re unvei­ling a poten­ti­ally cau­sal effect of the func­ti­o­nal dis­tri­bu­ti­on of inco­me in a gene­ral spe­ci­fi­ca­ti­on of the import func­ti­on, we find robust empi­ri­cal evi­den­ce that an incre­a­se in the wage sha­re has a sta­tis­ti­cally sig­ni­fi­cant nega­ti­ve (posi­ti­ve) impact on the volu­me of imports in deve­lo­ping (deve­lo­ped) coun­tri­es. The­re­fo­re, the neglect of such inco­me dis­tri­bu­ti­on effects in import demand func­ti­ons repre­sents the omis­si­on of both an empi­ri­cally rele­vant vari­a­ble and a the­o­re­ti­cally sig­ni­fi­cant chan­nel through whi­ch the func­ti­o­nal dis­tri­bu­ti­on of inco­me affects out­put growth under con­di­ti­ons of balan­ce-of-pay­ments cons­traints and a com­pe­ti­ti­ve real exchan­ge rate.

Keywords: Func­ti­o­nal dis­tri­bu­ti­on of inco­me; import demand; aggre­ga­te demand regi­mes; balan­ce-of-pay­ments-cons­trai­ned growth.