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Globalization and poverty: what is the evidence?

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  • Aisbett, Emma
  • Harrison, Ann
  • Zwane, Alix

Abstract

This chapter reviews the evidence on the linkages between globalization and poverty, drawing on the collected works of Jagdish Bhagwati and the results of an National Bureau of Economic Research (NBER) project directed by Ann Harrison, Globalization and Poverty. We focus on two measures of global¬ization: trade integration (measured using tariffs or trade flows), and international capital flows. Many economists have used the Heckscher-Ohlin framework in international trade to argue that the unskilled or the poor in countries with a comparative advantage in unskilled labor are most likely to gain from trade reform. Our first conclusion is that such a simple interpretation of general equilibrium trade models is likely to be misleading. Second, the evidence discussed suggests that the poor are more likely to share in the gains from glob¬alization when there are complementary policies in place. Such complementary policies include programs to promote human capital development, infrastructure development, credit and technical assistance to farmers, and macroeconomic sta¬bility. Third, we find that trade and foreign investment reforms have produced benefits for the poor, particularly those in exporting sectors or sectors which 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 suggests the need for carefully targeted safety nets. We emphasize the heterogeneity of results across different countries and set¬tings, but also present cross-country evidence which suggests that the path from globalization to poverty reduction via the growth effects of trade reforms is likely to be important.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 36595.

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Date of creation: 2006
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Handle: RePEc:pra:mprapa:36595

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Related research

Keywords: globalization; poverty; inequality; international trade;

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References

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  1. Branko Milanovic, 2002. "True World Income Distribution, 1988 and 1993: First Calculation Based on Household Surveys Alone," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 112(476), pages 51-92, January.
  2. Kanbur Ravi, 2001. "Economic Policy, Distribution and Poverty: The Nature of Disagreements," Peace Economics, Peace Science, and Public Policy, De Gruyter, De Gruyter, vol. 7(2), pages 1-26, April.
  3. 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.
  4. L. Alan Winters & Neil McCulloch & Andrew McKay, 2004. "Trade Liberalization and Poverty: The Evidence So Far," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 42(1), pages 72-115, March.
  5. repec:nbr:nberwo:11175 is not listed on IDEAS
  6. Emma Aisbett, 2007. "Why are the Critics So Convinced that Globalization is Bad for the Poor?," NBER Chapters, National Bureau of Economic Research, Inc, in: Globalization and Poverty, pages 33-86 National Bureau of Economic Research, Inc.
  7. Xavier Sala-i-Martin, 2002. "The world distribution of income (estimated from individual country distributions)," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 615, Department of Economics and Business, Universitat Pompeu Fabra, revised May 2002.
  8. Ann Harrison, 2007. "Globalization and Poverty," NBER Books, National Bureau of Economic Research, Inc, National Bureau of Economic Research, Inc, number harr06-1.
  9. 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.
  10. 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.
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Citations

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Cited by:
  1. Ural Marchand, Beyza, 2012. "Tariff pass-through and the distributional effects of trade liberalization," Journal of Development Economics, Elsevier, Elsevier, vol. 99(2), pages 265-281.
  2. Kanbur, Ravi, 2007. "Poverty, Inequality and Conflict," Working Papers, Cornell University, Department of Applied Economics and Management 126997, Cornell University, Department of Applied Economics and Management.
  3. Paolo Giordano & Kun Li, 2012. "An Updated Assessment of the Trade and Poverty Nexus in Latin America," IDB Publications 79119, Inter-American Development Bank.
  4. Ann Harrison, 2007. "Globalization and Poverty," NBER Books, National Bureau of Economic Research, Inc, National Bureau of Economic Research, Inc, number harr06-1.
  5. Dinga, Marián & Münich, Daniel, 2010. "The impact of territorially concentrated FDI on local labor markets: Evidence from the Czech Republic," Labour Economics, Elsevier, Elsevier, vol. 17(2), pages 354-367, April.
  6. Hirano, Yumeka & Otsubo, Shigeru, 2014. "Aid is good for the poor," Policy Research Working Paper Series, The World Bank 6998, The World Bank.
  7. Mirakhor, Abbas, 2007. "Islamic Finance and Globalization: A Convergence?," MPRA Paper 56026, University Library of Munich, Germany.
  8. Yang, Jun & Huang, Jikun & Rozelle, Scott & Martin, Will, 2012. "Where is the balance? Implications of adopting Special Products and Sensitive Products in Doha negotiations for world and China's agriculture," China Economic Review, Elsevier, Elsevier, vol. 23(3), pages 651-664.
  9. Ann Harrison & Margaret McMillan, 2007. "On the links between globalization and poverty," Journal of Economic Inequality, Springer, Springer, vol. 5(1), pages 123-134, April.
  10. McCleery, Robert K. & De Paolis, Fernando, 2008. "The Washington Consensus: A post-mortem," Journal of Asian Economics, Elsevier, Elsevier, vol. 19(5-6), pages 438-446.
  11. Ghazali, Monia, 2009. "Trade openness and wage inequality between skilled and unskilled workers in Tunisia," Economics Papers from University Paris Dauphine, Paris Dauphine University 123456789/12528, Paris Dauphine University.
  12. Arne Wiig, 2009. "Aid for trade: A misdirected initiative?," CMI Working Papers, CMI (Chr. Michelsen Institute), Bergen, Norway 4, CMI (Chr. Michelsen Institute), Bergen, Norway.
  13. repec:idb:brikps:72378 is not listed on IDEAS

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