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How May International Trade affect Poverty in a Developing Country Setup? The Inequality Channel

  • Mamoon, Dawood

Recently there has been an influx of literature which tries to find out relationship between trade and poverty. Right is of the view that more international trade is good for the poor whereas left is quite skeptical of pro poor effects of trade. The paper provides a comprehensive review of recent literature on the topic in order to reach some neutral grounds. The paper finds out that though trade might carry positive affects for the poor in developing countries through growth, such gains are not equally distributed among the rich and the poor. The paper identifies at least 8 different effects of international trade which result in unequal outcomes and thus defies Heckscher-Ohlin-Samuelson theorem in a developing country set up. Since per decomposition, poverty is affected by growth or inequality, evidence of unequal gains from trade does imply that the relationship between trade and poverty is not as simple as the right seems to suggest. To this effect, the paper calls for more empirical work on trade and inequality especially as single country case studies.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 2716.

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Date of creation: 2007
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Handle: RePEc:pra:mprapa:2716
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  1. Elena Ianchovichina & Terrie Walmsley, 2005. "Impact of China's WTO Accession on East Asia," Contemporary Economic Policy, Western Economic Association International, vol. 23(2), pages 261-277, 04.
  2. Amparo Castello & Rafael Domenech, 2002. "Human Capital Inequality and Economic Growth: Some New Evidence," Economic Journal, Royal Economic Society, vol. 112(478), pages C187-C200, March.
  3. John Cockburn, 2002. "Trade Liberalisation and Poverty in Nepal A Computable General Equilibrium Micro Simulation Analysis," Economics Series Working Papers WPS/2002-11, University of Oxford, Department of Economics.
  4. Oded Galor & Omer Moav, 2006. "Das Human-Kapital: A Theory of the Demise of the Class Structure," Review of Economic Studies, Oxford University Press, vol. 73(1), pages 85-117.
  5. Mamoon, D. & Murshed, S.M., 2007. "The education bias of 'trade liberalization' and wage inequality in developing countries," ISS Working Papers - General Series 18751, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
  6. James E. Anderson & Douglas Marcouiller, 1999. "Trade, Insecurity, and Home Bias: An Empirical Investigation," NBER Working Papers 7000, National Bureau of Economic Research, Inc.
  7. Spilimbergo, Antonio & Londono, Juan Luis & Szekely, Miguel, 1999. "Income distribution, factor endowments, and trade openness," Journal of Development Economics, Elsevier, vol. 59(1), pages 77-101, June.
  8. André Sapir & Richard Baldwin & Daniel Cohen & Anthony Venables, 1999. "Market integration, regionalism and the global economy," ULB Institutional Repository 2013/8074, ULB -- Universite Libre de Bruxelles.
  9. Tarp Jensen, Henning & Tarp, Finn, 2004. "Trade Liberalization and Spatial Inequality: A Methodological Innovation in Vietnamese Perspective," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  10. Rana Hasan & Devashish Mitra & K.V. Ramaswamy, 2007. "Trade Reforms, Labor Regulations, and Labor-Demand Elasticities: Empirical Evidence from India," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 466-481, August.
  11. Gordon H. Hanson & Ann Harrison, 1999. "Trade liberalization and wage inequality in Mexico," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 52(2), pages 271-288, January.
  12. Fischer, Ronald D., 2001. "The evolution of inequality after trade liberalization," Journal of Development Economics, Elsevier, vol. 66(2), pages 555-579, December.
  13. Lofgren, Hans, 1999. "Trade reform and the poor in Morocco: a rural-urban general equilibrium analysis of reduced protection," TMD discussion papers 38, International Food Policy Research Institute (IFPRI).
  14. Slaughter, Matthew J., 2001. "International trade and labor-demand elasticities," Journal of International Economics, Elsevier, vol. 54(1), pages 27-56, June.
  15. Galor, Oded & Tsiddon, Daniel, 1996. "Income Distribution and Growth: The Kuznets Hypothesis Revisited," Economica, London School of Economics and Political Science, vol. 63(250), pages S103-17, Suppl..
  16. Mamoon, D. & Murshed, S.M., 2005. "Are institutions more important than integration?," ISS Working Papers - General Series 19177, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
  17. Mamoon, Dawood, 2005. "Education for all is central to Higher Education Reforms in Developing Countries," MPRA Paper 2696, University Library of Munich, Germany.
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