Journal ArticleDOI
Trade Liberalisation and Poverty: What are the Links?
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In this article, the authors explore the likely effects of trade liberalisation on the prices of goods and services, taking into account the distribution sector and the dynamic issues of volatility, long-term economic growth, and short-term adjustment stresses.Abstract:
This paper asks whether a developing country's own trade liberalisation could translate into increased poverty, and what information would be required to identify whether it will do so. It plots the channels through which such effects might operate, identifying the static effects via four broad groups of institutions – households, distribution channels, factor markets and government – and the dynamic issues of volatility, long–term economic growth, and short–term adjustment stresses. An increase in the price of something a household sells (labour, good, service) increases its welfare. Thus, the paper first explores the likely effects of trade liberalisation on the prices of goods and services, taking into account the distribution sector. Also critical is whether trade reform creates or destroys markets. Trade reform is also likely to affects factor prices – of which the wages of the unskilled is the most important for poverty purposes. If reform boosts the demand for labour–intensive products, it boosts the demand for labour and wages and/or employment will increase. However, not all developing countries are relatively abundant in unskilled labour and trade can boost demand for semi–skilled rather than unskilled, labour. Hence poverty alleviation is not guaranteed. Trade reform can affect tariff revenue, but much less frequently and adversely than is popularly imagined. Even if it does, it is a political decision, not a law of nature, that the poor should suffer the resulting new taxes or cuts in government expenditure. Opening up the economy can reduce risk and variability because world markets are usually more stable than domestic ones. But sometimes it will increase them because stabilisation schemes are undermined or because residents switch to riskier activities. The non–poor can generally tide themselves over adjustment shocks from a liberalisation, so public policy should focus on whether the initially poor and near temporary, setbacks. The key to sustained poverty alleviation is economic growth. There is little reason to fear that growth will not boost the incomes of the poor. Similarly, while the argument that openness stimulates long–run growth has still not been completely proven, there is every presumption that it will.read more
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Journal ArticleDOI
Trade Liberalization and Poverty: The Evidence So Far
TL;DR: The authors assesses the current state of evidence on the impact of trade policy reform on poverty in developing countries and argues that there is no simple generalizable conclusion about the relationship between trade liberalization and poverty, and the picture is much less negative than is often suggested.
BookDOI
Predicting the poverty impacts of trade reform
TL;DR: In this paper, the authors present an overview of the literature on the microeconomic implications of macro-level policies, particularly those related to international trade, and point out that the dominance of earnings side effects over consumption side effects of trade reform can be attributed to the market for unskilled labor.
Market and Welfare Implications of Doha Reform Scenarios
TL;DR: In this paper, the potential gains from possible Doha scenarios were compared with a dynamic baseline (through 2015) and the gains from full reform, using the World Bank's Linkage global general equilibrium model.
BookDOI
Who Benefited from Trade Liberalization in Mexico? Measuring the Effects on Household Welfare
TL;DR: In this paper, an ex-post analysis of the effects of the trade liberalization in Mexico between 1989 and 2000, taking into account regional differences in the Mexican economy, is performed.
Journal ArticleDOI
Trade Openness and Developing Countries’ Vulnerability: Concepts, Misconceptions, and Directions for Research
TL;DR: This article presented a comprehensive review of the literature on the "destabilizing effects" of trade openness, drawing together studies in different fields, providing a conceptualization of vulnerability and three promising lines of reasoning for future research on the link between trade and vulnerability.
References
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Journal ArticleDOI
Economic Development with Unlimited Supplies of Labour
TL;DR: In this article, the authors present a different framework for solving problems of distribution accumulation and growth first in a closed and then in an open economy, where the assumption of an unlimited labor supply is used.
Posted Content
Migration unemployment and development: a two-sector analysis.
Harris,Michael P. Todaro +1 more
TL;DR: In this paper, the authors examined why rural-urban labor migration persists and is even increasing in many developing nations despite the existence of positive marginal products in agriculture and significant levels of urban unemployment, and concluded that in the absence of wage flexibility an optimal policy would include both partial wage subsidies or direct government employment and measures to restrict free migration.
Journal ArticleDOI
Economic Reform and the Process of Global Integration
TL;DR: The World Trade Organization (WTO) was established by agreement of more than 120 economies, with almost all the rest eager to join as rapidly as possible as mentioned in this paper, and the agreement included a codification of basic principles governing trade in goods and services.
Posted Content
Growth is Good for the Poor
David Dollar,Aart Kraay +1 more
TL;DR: Dollar and Kraay as mentioned in this paper found that the share of income accruing to the bottom quintile does not vary systematically with the average income, and that when average incomes rise, the average incomes of the poorest fifth of society rise proportionately.
Journal ArticleDOI
Trade Policy and Economic Growth: A Skeptic's Guide to the Cross-National Evidence
Francisco Rodríguez,Dani Rodrik +1 more
TL;DR: This paper found little evidence that open trade policies are significantly associated with economic growth, in the sense of lower tariff and nontariff barriers to trade, and showed that the indicators of openness used by researchers are poor measures of trade barriers or are highly correlated with other sources of bad economic performance.