Estimating the Poverty Impacts of Trade Liberalization
As a new round of World Trade Organization negotiations is being launched with greater emphasis on developing country participation, a body of literature is emerging which quantifies how international trade affects the poor in developing countries....
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2002/02/1717451/estimating-poverty-impacts-trade-liberalization http://hdl.handle.net/10986/15611 |
| Summary: | As a new round of World Trade
Organization negotiations is being launched with greater
emphasis on developing country participation, a body of
literature is emerging which quantifies how international
trade affects the poor in developing countries. In this
survey of the literature, the author summarizes and
classifies 35 trade and poverty studies into four
methodological categories; cross-country regression,
partial-equilibrium and cost-of-living analysis,
general-equilibrium simulation, and micro-macro synthesis.
These categories include a broad range of methodologies in
current use. The continuum of approaches is bounded on one
end by econometric analysis of household expenditure data,
which is the traditional domain of poverty specialists, and
sometimes labeled the "bottoms-up" approach. On
the other end of the continuum are computable general
equilibrium models based on national accounts data, or what
might be called the "top-down" approach. Another
feature of several recent trade and poverty studies--and one
of the primary conclusions to emerge from the October 2000
"Conference on Poverty and the International
Economy," sponsored by Globkom and the World Bank--is
the recognition that factor markets are perhaps the most
important link between trade and poverty, since households
tend to be much more specialized in income than they are in
consumption. Meanwhile, survet data on the income sources of
developing country households has become increasingly
available. As a result, this survey gives particular
emphasis to the means by which studies address factor market
links between trade and poverty. The general conclusion of
the author's survey is that any analysis of trade and
poverty needs to be informed by both the bottom-up and
top-down perspectives. Indeed, recent "two-step"
micro-macro studies sequentially link these two types of
frameworks, such that general equilibrium mechanisms are
incorporated along with detailed household survey
information. Another methodology in a similar spirit and
also increasingly used involves incorporating large numbers
of surveyed households into a general-equilibrium simulation
model. Although most of these studies have so far been
limited to a single region, these approaches can be readily
adapted for multi-region modeling so that trade and poverty
comparisons can be made across countries within a consistent framework. |
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