Globalization, Poverty And Role Of Infrastructures

The aim of this paper is to complement the theoretical and empirical literature on the globalization-poverty nexus. Based on a simple model of social welfare, the paper demonstrates that the different types of globalization have different effects on social welfare. The main empirical findings suggest that globalization contributes to poverty reduction but with a larger magnitude in the presence of infrastructures instruments. It follows that good quality of infrastructure is a necessary condition for a higher globalization effect on poverty reduction. The empirical evidence also supports the idea that globalization driven by the reduction in information access cost and the removal of barriers to their dissemination has the greatest impact on poverty reduction. Finally, the study discusses the economic policy implications and suggests in particular investment in adequate ICT and energy infrastructures for globalization to contribute significantly to the reduction of poverty.