Trade and gender
Trade and poverty in the developing world
New analysis on the links between trade policy, economic growth and poverty
Authors:
J. Cockburn (ed); P. Giordano (ed)
Publisher:
Poverty and Economic Policy Network , 2008
In spite of thirty years of trade reform, poverty rates in the developing world remain high. In particular, the degree of tariff liberalisation that has occurred during this time, on average, has not resulted in proportional reductions in poverty. But what have we learnt about the ingredients of pro-poor trade policy and how can the links between trade and poverty be further strengthened? A new report brought out by the Poverty and Economic Policy Research Network (PEP) and the Inter-American Development Bank (IAB) compiles the latest conceptual and methodological thinking on the links between trade, economic growth and poverty from around the world.
The report comprises of five issue papers entitled:
- Linking Trade and Pro-poor Growth: A Survey
- What We Do and Don’t Know About Trade Liberalisation and Poverty Reduction
- Trade and Poverty in Latin American Countries: Conceptual and Methodological Challenges
- Trade and Poverty: the Little We Know of the Effect in Africa and Possibly Why
- Does Trade Affect Women and Men Differently?
Conceptually, the papers find that:
- economic integration into global markets unleashes multiple and potentially favourable forces – diffusion of technology and information, innovation, increasing specialisation, institutional change, competition, increased product variety, among others – making the effects of trade reform endogenous and dynamic
- while theory generally suggests that trade openness is both pro-growth and pro-poor, empirical evidence shows mixed results
- the impact of trade reform on poverty appears to depend on a combination of pre-existing conditions – such as geography, market size, and institutional capacity – and complementary policies designed to help the poor participate in the positive opportunities that emerge while protecting them from the most harmful consequences
- a one-size-fits-all approach to trade reform is not feasible
Methodologically, the papers recommend that:
- the links between trade and poverty be examined through a combination of both ex ante modelling techniques and ex post econometric analysis
- studies that seek to assess the effects of trade policy on poverty must place a strong focus on micro analysis that allows for detailed, country-specific results
- policymakers must strengthen consultations with researchers when interpreting empirical evidence in the policy formulation process
- more empirical and theoretical work is needed to better understand the trade and poverty nexus
The report concludes that the availability of improved empirical evidence and analytical methodologies will assist developing countries in designing pro-poor trade policies. This task now needs to be addressed.
