The Impact of Income Inequality on Imports in Selected Member Countries of the Economic Cooperation Organization (ECO)

Abstract

Import is one of the important commercial and economic activities in all countries, which has been prevalent among different societies for the purpose of meeting the needs of the society for a long time, and paying attention to this economic activity in the progress and development of each country is known to be important and vital. Import helps the progress and development of countries when the factors affecting it are considered. In most of the empirical studies, the import of goods and services is a function of the per capita income and real exchange rate, and the impact of the intensity of income inequality on imports has been less investigated. However, the increase in income inequality increases the purchasing power of high-income groups and increases the demand of elastic goods, especially luxury goods, and changes in the composition of domestic and imported consumer goods. The present research has investigated the effect of inequality of income on import in selected ECO member countries (Turkey, Kyrgyzstan and Kazakhstan) during the period of (2001-2020) using method of generalized least squares (GLS). In this study, Per capita income, real exchange rate and income inequality have been considered as factors affecting imports. The obtained results indicate the existence of a positive and significant relationship between income inequality and imports in the countries under study. In addition, the relationship between per capita income and import is also positive and significant in these countries, but the relationship between real exchange rate and import is not significant.