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Attacking Poverty: Is It Globalisation?… Or Is It the Institutions?

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  • L. Cherchye
  • A. Watteyne

Abstract

We empirically analyze the relationship between globalisation and poverty. Deviating from the mainstream literature, we use ‘synthetic’ globalisation and poverty indicators, which combine multiple single indicators into single-valued statistics. Further, we study a sample that includes OECD countries as well as non-OECD countries, which allows us to examine the effect of structural differences between countries (summarized in a OECD dummy). Our results reveal no significant effect of globalisation on poverty when correcting for the OECD effect. We argue that this suggests institutional quality as a more fundamental determinant of a country’s poverty performance than the degree of integration with the global economy. On the methodological level, our use of synthetic indicators entails a parsimonious specification of the globalisation-poverty relationship, which increases its transparency.

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File URL: http://www.econ.kuleuven.be/tem/jaargangen/2001-2010/2003/TEM2003-4/02_Cherchye.pdf
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Bibliographic Info

Article provided by Katholieke Universiteit Leuven, Faculteit Economie en Bedrijfswetenschappen in its journal Review of Business and Economics.

Volume (Year): XLVIII (2003)
Issue (Month): 4 ()
Pages: 573-602

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Handle: RePEc:ete:revbec:20030402

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Web page: http://www.econ.kuleuven.be
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