Does Globalization Hurt the Poor?
Agenor attempts to examine analytically and empirically the extent to which globalization affects the poor in low- and middle-income countries. He begins with a description of various channels through which trade openness and financial integration...
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Format: | Policy Research Working Paper |
Language: | English en_US |
Published: |
World Bank, Washington, DC
2014
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Subjects: | |
Online Access: | http://documents.worldbank.org/curated/en/2002/10/2054539/globalization-hurt-poor http://hdl.handle.net/10986/19239 |
Summary: | Agenor attempts to examine analytically
and empirically the extent to which globalization affects
the poor in low- and middle-income countries. He begins with
a description of various channels through which trade
openness and financial integration may have an adverse
effect on poverty. However, the author also stresses the
possible nonlinearities involved-possibilities that have
seldom been recognized in the ongoing debate. Agenor then
presents cross-country regressions that relate measures of
real and financial integration to poverty. The regressions
control for changes in income per capita and output growth
rates, as well as various other macroeconomic and structural
variables, such as the inflation tax, changes in the real
exchange rate and the terms of trade, health and schooling
indicators, and macroeconomic volatility. The author uses
not only individual indicators of trade and financial
openness but also a "globalization index" based on
principal components analysis, and tests for both linear and
nonlinear effects. The results suggest the existence of a
nonmonotonic, Laffer-type relationship between globalization
and poverty. At low levels, globalization appears to hurt
the poor; but beyond a certain threshold, it seems to reduce
poverty-possibly because it brings with it renewed impetus
for reform. So, globalization may hurt the poor not because
it went too far, but rather because it did not go far enough. |
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