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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.

Suggested Citation

  • Aisbett, Emma & Harrison, Ann & Zwane, Alix, 2006. "Globalization and poverty: what is the evidence?," MPRA Paper 36595, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:36595
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    File URL: https://mpra.ub.uni-muenchen.de/36595/1/MPRA_paper_36595.pdf
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    References listed on IDEAS

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    1. Ann Harrison, 2007. "Globalization and Poverty," NBER Books, National Bureau of Economic Research, Inc, number harr06-1, July.
    2. Branko Milanovic, 2002. "True World Income Distribution, 1988 and 1993: First Calculation Based on Household Surveys Alone," Economic Journal, Royal Economic Society, vol. 112(476), pages 51-92, January.
    3. Angus Deaton, 2005. "Measuring Poverty in a Growing World (or Measuring Growth in a Poor World)," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 1-19, February.
    4. L. ALAN WINTERS & NEIL McCULLOCH & ANDREW McKAY, 2015. "Trade Liberalization and Poverty: The Evidence So Far," World Scientific Book Chapters,in: Non-Tariff Barriers, Regionalism and Poverty Essays in Applied International Trade Analysis, chapter 14, pages 271-314 World Scientific Publishing Co. Pte. Ltd..
    5. Kanbur Ravi, 2001. "Economic Policy, Distribution and Poverty: The Nature of Disagreements," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 7(2), pages 1-26, April.
    6. 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.
    7. 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.
    8. 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.
    9. Jorge F. Balat & Guido G. Porto, 2007. "Globalization and Complementary Policies: Poverty Impacts on Rural Zambia," NBER Chapters,in: Globalization and Poverty, pages 373-416 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. Olper, Alessandro & Curzi, Daniele & Swinnen, Jo, 2015. "Trade Liberalization and Child Mortality: A Synthetic Control Method," 2015 Conference, August 9-14, 2015, Milan, Italy 212597, International Association of Agricultural Economists.
    2. Kanbur, Ravi, 2007. "Poverty, Inequality and Conflict," Working Papers 126997, Cornell University, Department of Applied Economics and Management.
    3. Bergh, Andreas & Nilsson, Therese, 2014. "Is Globalization Reducing Absolute Poverty?," World Development, Elsevier, vol. 62(C), pages 42-61.
    4. Eric V. Edmonds & Nina Pavcnik & Petia Topalova, 2010. "Trade Adjustment and Human Capital Investments: Evidence from Indian Tariff Reform," American Economic Journal: Applied Economics, American Economic Association, vol. 2(4), pages 42-75, October.
    5. Ural Marchand, Beyza, 2012. "Tariff pass-through and the distributional effects of trade liberalization," Journal of Development Economics, Elsevier, vol. 99(2), pages 265-281.
    6. 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.
    7. Mirakhor, Abbas, 2007. "Islamic Finance and Globalization: A Convergence?," MPRA Paper 56026, University Library of Munich, Germany.
    8. Ann Harrison, 2007. "Globalization and Poverty," NBER Books, National Bureau of Economic Research, Inc, number harr06-1, July.
    9. Monia Ghazali, 2010. "Trade Openness, Relative Demand of Skilled Workers and Technological Change in Tunisia, 1998–2002," Working Papers 554, Economic Research Forum, revised 10 Jan 2010.
    10. Basu, Arnab K. & Chau, Nancy H. & Soundararajan, Vidhya, 2018. "Contract Employment as a Worker Discipline Device," IZA Discussion Papers 11579, Institute for the Study of Labor (IZA).
    11. 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, vol. 23(3), pages 651-664.
    12. Arne Wiig, 2009. "Aid for trade: A misdirected initiative?," CMI Working Papers 4, CMI (Chr. Michelsen Institute), Bergen, Norway.
    13. Ann Harrison & Margaret McMillan, 2007. "On the links between globalization and poverty," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 5(1), pages 123-134, April.
    14. repec:bla:worlde:v:40:y:2017:i:10:p:2125-2152 is not listed on IDEAS
    15. Ann Harrison, 2007. "Globalization and Poverty: An Introduction," NBER Chapters,in: Globalization and Poverty, pages 1-32 National Bureau of Economic Research, Inc.
    16. repec:dau:papers:123456789/12528 is not listed on IDEAS
    17. Paolo Giordano & Kun Li, 2012. "An Updated Assessment of the Trade and Poverty Nexus in Latin America," IDB Publications (Working Papers) 79119, Inter-American Development Bank.
    18. 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.
    19. Rodríguez-Pose, Andrés & Hardy, Daniel, 2015. "Addressing poverty and inequality in the rural economy from a global perspective," LSE Research Online Documents on Economics 63257, London School of Economics and Political Science, LSE Library.
    20. Hirano, Yumeka & Otsubo, Shigeru, 2014. "Aid is good for the poor," Policy Research Working Paper Series 6998, The World Bank.
    21. Harrison, Ann & Rodríguez-Clare, Andrés, 2010. "Trade, Foreign Investment, and Industrial Policy for Developing Countries," Handbook of Development Economics, Elsevier.
    22. repec:asi:ijoass:2017:p:818-838 is not listed on IDEAS
    23. Paolo Giordano & Kun Li, 2012. "An Updated Assessment of the Trade and Poverty Nexus in Latin America," IDB Publications (Working Papers) 4209, Inter-American Development Bank.
    24. repec:idb:brikps:72378 is not listed on IDEAS

    More about this item

    Keywords

    globalization; poverty; inequality; international trade;

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • F1 - International Economics - - Trade

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