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Globalization and Poverty

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Author Info
Ann Harrison

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Abstract

This essay surveys the evidence on the linkages between globalization and poverty. I focus on two measures of globalization: trade and international capital flows. Past researchers have argued that global economic integration should help the poor since poor countries have a comparative advantage in producing goods that use unskilled labor. The first conclusion of this essay is that such a simple interpretation of general equilibrium trade models is likely to be misleading. Second, the evidence suggests that the poor are more likely to share in the gains from globalization when there are complementary policies in place. Such complementary policies include investments in human capital and infrastructure, as well as policies to promote credit and technical assistance to farmers, and policies to promote macroeconomic stability. Third, trade and foreign investment reforms have produced benefits for the poor in exporting sectors and sectors that receive foreign investment. Fourth, financial crises are very costly to the poor. Finally, the collected evidence suggests that globalization produces both winners and losers among the poor. The fact that some poor individuals are made worse off by trade or financial integration underscores the need for carefully targeted safety nets.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12347.

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Date of creation: Jul 2006
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Handle: RePEc:nbr:nberwo:12347

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Find related papers by JEL classification:
F1 - International Economics - - Trade
O1 - Economic Development, Technological Change, and Growth - - Economic Development
I3 - Health, Education, and Welfare - - Welfare and Poverty

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Petia Topalova, 2005. "Trade Liberalization, Poverty, and Inequality: Evidence from Indian Districts," NBER Working Papers 11614, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Branko Milanovic & Lyn Squire, 2005. "Does tariff liberalization increase wage inequality? Some empirical evidence," International Trade 0502012, EconWPA. [Downloadable!]
    Other versions:
  3. Gordon H. Hanson, 2005. "Globalization, Labor Income, and Poverty in Mexico," NBER Working Papers 11027, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Jagdish Bhagwati & T. N. Srinivasan, 2002. "Trade and Poverty in the Poor Countries," American Economic Review, American Economic Association, vol. 92(2), pages 180-183, May. [Downloadable!]
  5. Lee, Ha Yan & Ricci, Luca Antonio & Rigobon, Roberto, 2004. "Once again, is openness good for growth?," Journal of Development Economics, Elsevier, vol. 75(2), pages 451-472, December. [Downloadable!] (restricted)
    Other versions:
  6. Goh, Chor-Ching & Smarzynska Javorcik, Beata, 2005. "Trade Protection and Industry Wage Structure in Poland," CEPR Discussion Papers 4929, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  7. Ravallion, Martin, 2004. "Competing concepts of inequality in the globalization debate," Policy Research Working Paper Series 3243, The World Bank. [Downloadable!]
  8. Francisco Rodriguez & Dani Rodrik, 1999. "Trade Policy and Economic Growth: A Skeptic's Guide to the Cross-national Evidence," Electronic Working Papers 99-003, University of Maryland, Department of Economics. [Downloadable!]
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  9. Pinelopi K. Goldberg & Nina Pavcnik, 2004. "Trade, Inequality, and Poverty: What Do We Know? Evidence from Recent Trade Liberalization Episodes in Developing Countries," NBER Working Papers 10593, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Angus Deaton, 2003. "Measuring Poverty in a Growing World (or Measuring Growth in a Poor World)," NBER Working Papers 9822, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  11. Xavier Sala-i-Martin, 2002. "The World Distribution of Income (estimated from Individual Country Distributions)," NBER Working Papers 8933, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  12. Kenneth Rogoff & M. Ayhan Kose & Eswar Prasad & Shang-Jin Wei, 2004. "Effects on Financial Globalization on Developing Countries: Some Empirical Evidence," IMF Occasional Papers 220, International Monetary Fund.
  13. Ann Harrison & Gordon Hanson, 1999. "Who Gains from Trade Reform? Some Remaining Puzzles," NBER Working Papers 6915, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  14. Dollar, David & Kraay, Aart, 2001. "Trade, growth, and poverty," Policy Research Working Paper Series 2615, The World Bank. [Downloadable!]
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  15. L. Alan Winters & Neil McCulloch & Andrew McKay, 2004. "Trade Liberalization and Poverty: The Evidence So Far," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 72-115, March. [Downloadable!] (restricted)
  16. Xavier Sala-i-Martin, 2002. "The disturbing "rise" of global income inequality," Discussion Papers 0102-44, Columbia University, Department of Economics. [Downloadable!]
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  17. Ravallion, Martin, 2004. "Looking beyond averages in the trade and poverty debate," Policy Research Working Paper Series 3461, The World Bank. [Downloadable!]
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  18. Emma Aisbett, 2005. "Why are the Critics so Convinced that Globalization is Bad for the Poor?," NBER Working Papers 11066, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  19. Kanbur, Ravi, 2001. "Economic Policy, Distribution and Poverty: The Nature of Disagreements," World Development, Elsevier, vol. 29(6), pages 1083-1094, June. [Downloadable!] (restricted)
  20. James Levinsohn & Margaret McMillan, 2005. "Does Food Aid Harm the Poor? Household Evidence from Ethiopia," NBER Working Papers 11048, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  21. Agenor, Pierre-Richard, 2002. "Does globalization hurt the poor?," Policy Research Working Paper Series 2922, The World Bank. [Downloadable!]
  22. Jorge F. Balat & Guido Porto, 2005. "Globalization and Complementary Policies: Poverty Impacts in Rural Zambia," NBER Working Papers 11175, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  23. Deaton, A., 2000. "Counting the World's Poor: Problems and Possible Solutions," Papers 197, Princeton, Woodrow Wilson School - Development Studies.
    Other versions:
  24. Timothy Besley & Robin Burgess, 2003. "Halving Global Poverty," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 3-22, Summer. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Ann Harrison & Margaret McMillan, 2007. "On the links between globalization and poverty," Journal of Economic Inequality, Springer, vol. 5(1), pages 123-134, April. [Downloadable!] (restricted)
  2. Philippe Aghion & Robin Burgess & Stephen Redding & Fabrizio Zilibotti, 2006. "The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India," NBER Working Papers 12031, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Eric V. Edmonds & Nina Pavcnik & Petia Topalova, 2007. "Trade Adjustment and Human Capital Investments: Evidence from Indian Tariff Reform," IZA Discussion Papers 2611, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. Irene Brambilla & Guido G. Porto, 2005. "Farm Productivity and Market Structure. Evidence From Cotton Reforms in Zambia," Working Papers 919, Economic Growth Center, Yale University. [Downloadable!]
    Other versions:
  5. Naci Canpolat & Hüseyin Ozel, 2008. "Evolutionary Dynamics of Globalization," Working Papers 2008/16, Turkish Economic Association. [Downloadable!]
  6. Irene Brambilla & Guido Porto, 2005. "Market Structure, Outgrower contracs and Farm Output. Evidence from Cotton Reforms in Zambia," NBER Working Papers 11804, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Roine, Jesper & Vlachos, Jonas & Waldenström, Daniel, 2007. "What Determines Top Income Shares? Evidence from the Twentieth Century," Research Papers in Economics 2007:17, Stockholm University, Department of Economics. [Downloadable!]
    Other versions:
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