Trade and Poverty in EU Regions : An Empirical Analysis
This study builds on recent efforts by the World Bank and the European Commission in generating detailed poverty estimates at detailed subnational levels (the EU Poverty Map). This information is combined with estimates of subnational trade flow da...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/875451584423552574/Trade-and-Poverty-in-EU-Regions-An-Empirical-Analysis http://hdl.handle.net/10986/33454 |
| Summary: | This study builds on recent efforts by
the World Bank and the European Commission in generating
detailed poverty estimates at detailed subnational levels
(the EU Poverty Map). This information is combined with
estimates of subnational trade flow data for subnational
regions between 2000-2010, as well as information on country
and regional characteristics. Poverty estimates from the EU
Poverty Map refers to a relative concept of poverty,
measuring the share of population below a country-specific
low-income threshold. This notion of relative poverty can be
informative of disparities in welfare gains within countries
often associated with trade, especially given the current
backlash on globalization from the perception that it may
leave some segments of the population behind. The negative
relationship between poverty and trade is observed when both
import and export openness are considered individually, but
it arises more clearly in the case of export orientation.
Export orientation can be associated with lower levels of
poverty particularly in the poorest regions. The
relationship between import exposure and poverty rates is
not significant. Additional analyses show that export
openness is more strongly linked to lower poverty in regions
where production tends to be more ‘low-tech’. All together,
these results suggest that both exports and imports are
associated to lower poverty, but especially when it relates
to higher export opportunities in poorer regions and where
production is concentrated in relatively labor-intensive
goods. While this analysis does not consider micro-level
effects such as at the enterprise or household level that
could possibly show greater heterogeneity, the results
suggest that cross-country estimates in the literature that
show a positive effect of trade openness on economic
performance tend to hold at subnational regional levels in
the EU. Overall, this study shows that poverty and the
relative concentrations of poor people in the EU is an issue
that policymakers should put high on the agenda. Opening
markets and creating a more level playing field in global
markets for export opportunities is critical for regional
development. For certain regions however, policies to
support the transition and the mitigation of transition
costs may be necessary. While the empirical evidence is
still building up, whether this assistance should be
industry-based, versus locality based, is an important
distinction, as trade shock effects seems to matter more by
locality than by industry. |
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