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Trade policy reform and poverty alleviation


  • Hoekman, Bernard
  • Michalopoulos, Constantine
  • Schiff, Maurice
  • Tarr, David


In this paper, developed as part of the World Bank's Poverty Reduction Strategy Sourcebook, the authors examine how to implement trade liberalization as part of a strategy for alleviating poverty in developing countries. They discuss trade policy instruments, institutions, complementary policies, sector issues, adjustment policies, and safety nets in an integrated approach to trade policy as a tool for poverty alleviation. The authors examine the patterns or models of trade policy that have been successful in alleviating poverty. They discuss the role of tariffs, nontariff barriers, contingent protection (such as safeguards and antidumping), special import regimes (such as duty drawback), export taxes, export subsidies, and trade-related institutions (such as standards, marketing, export finance, customs clearance, and regional trade arrangements). The authors also discuss policies that complement successful trade reform, including macroeconomic stability, a competitive exchange rate, flexible labor markets, competitive product markets, and policies that do not discriminate against foreigners in investment. They suggest approaches to policies and institutions in services and agriculture, key sectors in poverty reduction. They explain the roles of retraining and safety nets in dealing with the adjustment costs of trade liberalization. Finally, the authors elaborate guidelines for implementing trade reform and explain tools for assessing whether trade reform will help or harm the poor in particular sectors in the short run.

Suggested Citation

  • Hoekman, Bernard & Michalopoulos, Constantine & Schiff, Maurice & Tarr, David, 2001. "Trade policy reform and poverty alleviation," Policy Research Working Paper Series 2733, The World Bank.
  • Handle: RePEc:wbk:wbrwps:2733

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    Cited by:

    1. Oyewumi, Olubukola Ayodeju & Jooste, Andre & Britz, Wolfgang & van Schalkwyk, Herman D., 2008. "Trade Liberalization in the South African Livestock Industry: implications for rural development," 2007 Second International Conference, August 20-22, 2007, Accra, Ghana 51997, African Association of Agricultural Economists (AAAE).
    2. Barraud, Ariel & Calfat, Germán, 2006. "The effects of liberalizing the yellow maize market in Guatemala: a partial equilibrium multi-market approach," IOB Working Papers 2006.03, Universiteit Antwerpen, Institute of Development Policy (IOB).
    3. Vergez, Antonin, 2007. "Agricultural Price Seasonality and Market Failure: Examining the Net Seller Household and the Net Benefit Ratio Definition," 106th Seminar, October 25-27, 2007, Montpellier, France 7911, European Association of Agricultural Economists.
    4. Kym Anderson, 2005. "Agricultural trade reform and poverty reduction in developing countries," Chapters,in: Trade Policy Reforms and Development, chapter 9 Edward Elgar Publishing.
    5. Oyewumi, Olubukola Ayodeju, 2005. "Modeling tariff rate quotas in the South African livestock industry," Master's Degree Theses 28064, University of the Free State, Department of Agricultural Economics.
    6. Tsai, Pan-Long & Huang, Chao-Hsi, 2007. "Openness, Growth and Poverty: The Case of Taiwan," World Development, Elsevier, vol. 35(11), pages 1858-1871, November.
    7. Ariel Barraud & German Calfat, 2008. "Poverty Effects from Trade Liberalisation in Argentina," Journal of Development Studies, Taylor & Francis Journals, vol. 44(3), pages 365-383.
    8. Cadot, Olivier & de Melo, Jaime & Dutoit, Laure, 2006. "The Elimination of Madagascar's Vanilla Marketing Board, Ten Years On," CEPR Discussion Papers 5548, C.E.P.R. Discussion Papers.
    9. Sami Bibi & Rim Chatti, 2006. "Trade Liberalization and the Dynamics of Poverty in Tunisia: a Layered CGE Microsimulation Analysis/Libéralisation des échanges et dynamique de la pauvreté en Tunisie: Analyse avec une micro-simulatio," Working Papers MPIA 2006-07, PEP-MPIA.


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