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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. Ann Harrison, 2007. "Globalization and Poverty," NBER Books, National Bureau of Economic Research, Inc, number harr06-1, October.
  2. 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.
  3. 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.
  4. Emma Aisbett, 2007. "Why are the Critics So Convinced that Globalization is Bad for the Poor?," NBER Chapters, in: Globalization and Poverty, pages 33-86 National Bureau of Economic Research, Inc.
  5. James Levinsohn & Margaret McMillan, 2007. "Does Food Aid Harm the Poor? Household Evidence from Ethiopia," NBER Chapters, in: Globalization and Poverty, pages 561-598 National Bureau of Economic Research, Inc.
  6. 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.
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Citations

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Cited by:
  1. Kanbur, Ravi, 2007. "Poverty, Inequality and Conflict," Working Papers 126997, Cornell University, Department of Applied Economics and Management.
  2. McCleery, Robert K. & De Paolis, Fernando, 2008. "The Washington Consensus: A post-mortem," Journal of Asian Economics, Elsevier, vol. 19(5-6), pages 438-446.
  3. Dinga, Marián & Münich, Daniel, 2010. "The impact of territorially concentrated FDI on local labor markets: Evidence from the Czech Republic," Labour Economics, Elsevier, vol. 17(2), pages 354-367, April.
  4. Ann Harrison, 2006. "Globalization and Poverty," NBER Working Papers 12347, National Bureau of Economic Research, Inc.
  5. Arne Wiig, 2009. "Aid for trade: A misdirected initiative?," CMI Working Papers 4, CMI (Chr. Michelsen Institute), Bergen, Norway.
  6. Ann Harrison & Margaret McMillan, 2007. "On the links between globalization and poverty," Journal of Economic Inequality, Springer, vol. 5(1), pages 123-134, April.
  7. Paolo Giordano & Victoria Florez, 2008. "Una evaluación del vínculo entre comercio y pobreza en América Latina," IDB Publications 72378, Inter-American Development Bank.

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