Does Trade Reduce Poverty? A View from Africa
Although trade liberalization is being actively promoted as a key component in development strategies, theoretically, the impact of trade openness on poverty reduction is ambiguous. A more liberalized trade regime is argued to change relative facto...
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| Format: | Policy Research Working Paper |
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World Bank, Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2013/01/17194965/trade-reduce-poverty-view-africa http://hdl.handle.net/10986/12165 |
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okr-10986-121652021-04-23T14:03:06Z Does Trade Reduce Poverty? A View from Africa Le Goff, Maëlan Singh, Raju Jan ABSOLUTE POVERTY ABSOLUTE VALUE AVERAGE TRADE BARRIERS TO ENTRY BENEFITS OF TRADE BOND CAPITAL ACCUMULATION CAPITAL GOODS COMPARATIVE ADVANTAGE COMPETITION POLICY CONSUMER PRICE INDEX CONSUMER PRICES COUNTRY CHARACTERISTICS COUNTRY LEVEL COUNTRY RISK CROSS-COUNTRY ANALYSIS DEPENDENT VARIABLE DEVELOPED WORLD DEVELOPING COUNTRIES DEVELOPING ECONOMIES DEVELOPMENT ECONOMICS DEVELOPMENT INDICATORS DEVELOPMENT POLICY DEVELOPMENT RESEARCH DEVELOPMENT STRATEGIES DOMESTIC CREDIT DYNAMIC PANEL ECONOMETRIC ANALYSIS ECONOMETRICS ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC INTEGRATION ECONOMIC LITERATURE ECONOMIC POLICY ECONOMIC REFORM ECONOMIC STUDIES ECONOMIC VOLATILITY ECONOMICS LETTERS EDUCATION LEVEL EMPIRICAL EVIDENCE EMPIRICAL LITERATURE EMPIRICAL RESULTS ERROR TERM EXPLANATORY VARIABLES EXPORTS EXPOSURE FACTOR ENDOWMENTS FACTOR PRICES FINANCIAL DEPTH FINANCIAL DEVELOPMENT FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SECTORS FINANCIAL SYSTEM FOREIGN COMPETITION GDP GDP PER CAPITA GLOBAL ECONOMY GLOBALIZATION GROWTH REGRESSIONS HEADCOUNT POVERTY HEADCOUNT RATIO HUMAN CAPITAL IMPACT OF TRADE IMPORTS INCOME INCOME DISTRIBUTION INCOME INEQUALITY INCOMES INFLATION INSTITUTIONAL ENVIRONMENT INTERNATIONAL COMPETITION INTERNATIONAL ECONOMICS INTERNATIONAL TRADE INVESTMENT CLIMATE LABOR MARKET LAGGED VALUES LEGAL SYSTEM LONG RUN MACROECONOMIC ENVIRONMENT MACROECONOMIC STABILITY MACROECONOMICS MEASURE OF TRADE MONETARY ECONOMICS NATURAL RESOURCES NEGATIVE EFFECT NON-TARIFF BARRIERS 0 HYPOTHESIS OPEN ECONOMIES OUTPUT POLICY MEASURES POLICY REFORMS POLICY RESEARCH POOR COUNTRIES POOR PEOPLE POOR POLICIES POVERTY ALLEVIATION POVERTY GAP POVERTY LINE POVERTY REDUCTION PRICE INDEX PRIMARY EDUCATION PRIVATE SECTOR CREDIT PRO-POOR PROPERTY RIGHTS RAPID GROWTH REAL INCOME RESOURCE ALLOCATION SERIAL CORRELATION SPECIALIZATION STANDARD DEVIATION STRUCTURAL CHARACTERISTICS TARIFF BARRIERS TARIFF DATA TARIFF RATES TECHNOLOGICAL CHANGE TRADE AGREEMENTS TRADE DATA TRADE EFFECTS TRADE LIBERALIZATION TRADE OPENING TRADE OPENNESS TRADE POLICIES TRADE POLICY TRADE PROTECTION TRADE REFORM TRADE REFORMS TRADE REGIME TRADE RESTRICTIONS UNSKILLED LABOR WAGE DIFFERENTIALS WAGE INEQUALITY WAGE STRUCTURE WAGES WELFARE GAINS WORLD DEVELOPMENT INDICATORS WTO Although trade liberalization is being actively promoted as a key component in development strategies, theoretically, the impact of trade openness on poverty reduction is ambiguous. A more liberalized trade regime is argued to change relative factor prices in favor of the more abundant factor. If poverty and relative low income stem from abundance of labor, greater trade openness should lead to higher labor prices and a decrease in poverty. However, should the re-allocation of factors be hampered, the expected benefits from freer trade may not materialize. The theoretical ambiguity on the effects of openness is reflected in the available empirical evidence. This paper examines how the effect of trade openness on poverty may depend on complementary reforms that help a country take advantage of international competition. Using a non-linear regression specification that interacts a proxy of trade openness with proxies of various country structural specificities and a panel of 30 African countries over the period 1981-2010, the analysis finds that trade openness tends to reduce poverty in countries where financial sectors are deep, education levels high and governance strong. 2013-01-28T17:32:34Z 2013-01-28T17:32:34Z 2013-01 http://documents.worldbank.org/curated/en/2013/01/17194965/trade-reduce-poverty-view-africa http://hdl.handle.net/10986/12165 English en_US Policy Research Working Paper; No. 6327 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Africa |
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Digital Repository |
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Foreign Institution |
| institution |
Digital Repositories |
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World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ABSOLUTE POVERTY ABSOLUTE VALUE AVERAGE TRADE BARRIERS TO ENTRY BENEFITS OF TRADE BOND CAPITAL ACCUMULATION CAPITAL GOODS COMPARATIVE ADVANTAGE COMPETITION POLICY CONSUMER PRICE INDEX CONSUMER PRICES COUNTRY CHARACTERISTICS COUNTRY LEVEL COUNTRY RISK CROSS-COUNTRY ANALYSIS DEPENDENT VARIABLE DEVELOPED WORLD DEVELOPING COUNTRIES DEVELOPING ECONOMIES DEVELOPMENT ECONOMICS DEVELOPMENT INDICATORS DEVELOPMENT POLICY DEVELOPMENT RESEARCH DEVELOPMENT STRATEGIES DOMESTIC CREDIT DYNAMIC PANEL ECONOMETRIC ANALYSIS ECONOMETRICS ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC INTEGRATION ECONOMIC LITERATURE ECONOMIC POLICY ECONOMIC REFORM ECONOMIC STUDIES ECONOMIC VOLATILITY ECONOMICS LETTERS EDUCATION LEVEL EMPIRICAL EVIDENCE EMPIRICAL LITERATURE EMPIRICAL RESULTS ERROR TERM EXPLANATORY VARIABLES EXPORTS EXPOSURE FACTOR ENDOWMENTS FACTOR PRICES FINANCIAL DEPTH FINANCIAL DEVELOPMENT FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SECTORS FINANCIAL SYSTEM FOREIGN COMPETITION GDP GDP PER CAPITA GLOBAL ECONOMY GLOBALIZATION GROWTH REGRESSIONS HEADCOUNT POVERTY HEADCOUNT RATIO HUMAN CAPITAL IMPACT OF TRADE IMPORTS INCOME INCOME DISTRIBUTION INCOME INEQUALITY INCOMES INFLATION INSTITUTIONAL ENVIRONMENT INTERNATIONAL COMPETITION INTERNATIONAL ECONOMICS INTERNATIONAL TRADE INVESTMENT CLIMATE LABOR MARKET LAGGED VALUES LEGAL SYSTEM LONG RUN MACROECONOMIC ENVIRONMENT MACROECONOMIC STABILITY MACROECONOMICS MEASURE OF TRADE MONETARY ECONOMICS NATURAL RESOURCES NEGATIVE EFFECT NON-TARIFF BARRIERS 0 HYPOTHESIS OPEN ECONOMIES OUTPUT POLICY MEASURES POLICY REFORMS POLICY RESEARCH POOR COUNTRIES POOR PEOPLE POOR POLICIES POVERTY ALLEVIATION POVERTY GAP POVERTY LINE POVERTY REDUCTION PRICE INDEX PRIMARY EDUCATION PRIVATE SECTOR CREDIT PRO-POOR PROPERTY RIGHTS RAPID GROWTH REAL INCOME RESOURCE ALLOCATION SERIAL CORRELATION SPECIALIZATION STANDARD DEVIATION STRUCTURAL CHARACTERISTICS TARIFF BARRIERS TARIFF DATA TARIFF RATES TECHNOLOGICAL CHANGE TRADE AGREEMENTS TRADE DATA TRADE EFFECTS TRADE LIBERALIZATION TRADE OPENING TRADE OPENNESS TRADE POLICIES TRADE POLICY TRADE PROTECTION TRADE REFORM TRADE REFORMS TRADE REGIME TRADE RESTRICTIONS UNSKILLED LABOR WAGE DIFFERENTIALS WAGE INEQUALITY WAGE STRUCTURE WAGES WELFARE GAINS WORLD DEVELOPMENT INDICATORS WTO |
| spellingShingle |
ABSOLUTE POVERTY ABSOLUTE VALUE AVERAGE TRADE BARRIERS TO ENTRY BENEFITS OF TRADE BOND CAPITAL ACCUMULATION CAPITAL GOODS COMPARATIVE ADVANTAGE COMPETITION POLICY CONSUMER PRICE INDEX CONSUMER PRICES COUNTRY CHARACTERISTICS COUNTRY LEVEL COUNTRY RISK CROSS-COUNTRY ANALYSIS DEPENDENT VARIABLE DEVELOPED WORLD DEVELOPING COUNTRIES DEVELOPING ECONOMIES DEVELOPMENT ECONOMICS DEVELOPMENT INDICATORS DEVELOPMENT POLICY DEVELOPMENT RESEARCH DEVELOPMENT STRATEGIES DOMESTIC CREDIT DYNAMIC PANEL ECONOMETRIC ANALYSIS ECONOMETRICS ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC INTEGRATION ECONOMIC LITERATURE ECONOMIC POLICY ECONOMIC REFORM ECONOMIC STUDIES ECONOMIC VOLATILITY ECONOMICS LETTERS EDUCATION LEVEL EMPIRICAL EVIDENCE EMPIRICAL LITERATURE EMPIRICAL RESULTS ERROR TERM EXPLANATORY VARIABLES EXPORTS EXPOSURE FACTOR ENDOWMENTS FACTOR PRICES FINANCIAL DEPTH FINANCIAL DEVELOPMENT FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SECTORS FINANCIAL SYSTEM FOREIGN COMPETITION GDP GDP PER CAPITA GLOBAL ECONOMY GLOBALIZATION GROWTH REGRESSIONS HEADCOUNT POVERTY HEADCOUNT RATIO HUMAN CAPITAL IMPACT OF TRADE IMPORTS INCOME INCOME DISTRIBUTION INCOME INEQUALITY INCOMES INFLATION INSTITUTIONAL ENVIRONMENT INTERNATIONAL COMPETITION INTERNATIONAL ECONOMICS INTERNATIONAL TRADE INVESTMENT CLIMATE LABOR MARKET LAGGED VALUES LEGAL SYSTEM LONG RUN MACROECONOMIC ENVIRONMENT MACROECONOMIC STABILITY MACROECONOMICS MEASURE OF TRADE MONETARY ECONOMICS NATURAL RESOURCES NEGATIVE EFFECT NON-TARIFF BARRIERS 0 HYPOTHESIS OPEN ECONOMIES OUTPUT POLICY MEASURES POLICY REFORMS POLICY RESEARCH POOR COUNTRIES POOR PEOPLE POOR POLICIES POVERTY ALLEVIATION POVERTY GAP POVERTY LINE POVERTY REDUCTION PRICE INDEX PRIMARY EDUCATION PRIVATE SECTOR CREDIT PRO-POOR PROPERTY RIGHTS RAPID GROWTH REAL INCOME RESOURCE ALLOCATION SERIAL CORRELATION SPECIALIZATION STANDARD DEVIATION STRUCTURAL CHARACTERISTICS TARIFF BARRIERS TARIFF DATA TARIFF RATES TECHNOLOGICAL CHANGE TRADE AGREEMENTS TRADE DATA TRADE EFFECTS TRADE LIBERALIZATION TRADE OPENING TRADE OPENNESS TRADE POLICIES TRADE POLICY TRADE PROTECTION TRADE REFORM TRADE REFORMS TRADE REGIME TRADE RESTRICTIONS UNSKILLED LABOR WAGE DIFFERENTIALS WAGE INEQUALITY WAGE STRUCTURE WAGES WELFARE GAINS WORLD DEVELOPMENT INDICATORS WTO Le Goff, Maëlan Singh, Raju Jan Does Trade Reduce Poverty? A View from Africa |
| geographic_facet |
Africa |
| relation |
Policy Research Working Paper; No. 6327 |
| description |
Although trade liberalization is being
actively promoted as a key component in development
strategies, theoretically, the impact of trade openness on
poverty reduction is ambiguous. A more liberalized trade
regime is argued to change relative factor prices in favor
of the more abundant factor. If poverty and relative low
income stem from abundance of labor, greater trade openness
should lead to higher labor prices and a decrease in
poverty. However, should the re-allocation of factors be
hampered, the expected benefits from freer trade may not
materialize. The theoretical ambiguity on the effects of
openness is reflected in the available empirical evidence.
This paper examines how the effect of trade openness on
poverty may depend on complementary reforms that help a
country take advantage of international competition. Using a
non-linear regression specification that interacts a proxy
of trade openness with proxies of various country structural
specificities and a panel of 30 African countries over the
period 1981-2010, the analysis finds that trade openness
tends to reduce poverty in countries where financial sectors
are deep, education levels high and governance strong. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Le Goff, Maëlan Singh, Raju Jan |
| author_facet |
Le Goff, Maëlan Singh, Raju Jan |
| author_sort |
Le Goff, Maëlan |
| title |
Does Trade Reduce Poverty? A View from Africa |
| title_short |
Does Trade Reduce Poverty? A View from Africa |
| title_full |
Does Trade Reduce Poverty? A View from Africa |
| title_fullStr |
Does Trade Reduce Poverty? A View from Africa |
| title_full_unstemmed |
Does Trade Reduce Poverty? A View from Africa |
| title_sort |
does trade reduce poverty? a view from africa |
| publisher |
World Bank, Washington, DC |
| publishDate |
2013 |
| url |
http://documents.worldbank.org/curated/en/2013/01/17194965/trade-reduce-poverty-view-africa http://hdl.handle.net/10986/12165 |
| _version_ |
1764422119981056000 |