Income distribution, development and foreign trade. A cross-sectional analysis*

This paper analyses cross-sectional evidence on income inequality in developing countries within a consistent theoretical framework where the major explanatory variables are factor endowments, their ownership structure and foreign trade distortions. The resulting explanation of cross-country differences in income distribution is considerably better than what is found in the existing literature. Endowments in mineral resources, land concentration in agricultural exports, trade protection and secondary schooling are shown to be major determinants of differences in income inequality across developing countries.