Working Paper: CEPR ID: DP9947
Authors: L. Alan Winters; Antonio Martuscelli
Abstract: This paper reviews key recent literature on the effects of trade liberalisation on poverty in developing countries and asks whether our knowledge has changed significantly over a decade. The conclusion that liberalisation generally boosts income and thus reduces poverty has not changed; some suggest that this is not true for very poor countries, but this is not an established finding. On microeconomics, recent literature again confirms that liberalisation has very heterogeneous effects on poor households, depending, inter alia, on what trade policies are liberalised and how the household earns its living. Working in the export predicts gains and in the import-competing sector losses, a finding that is re-inforced by studies of the effects of liberalisation on wages. New research has suggested several ways in which intra-sectoral wage inequality is increased by trade, but this does not generally indicate that the poor actually lose. A fairly common finding is that female workers gain from trade liberalisation.
Keywords: developing countries; growth; poverty; tariffs; trade liberalisation
JEL Codes: O24; F13; F14; O19
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| export sector work (F10) | income gains (E25) |
| import-competing sector work (L19) | income losses (J17) |
| female workers (J82) | gains from trade liberalisation (F10) |
| trade liberalisation (F13) | income (E25) |
| income (E25) | poverty (I32) |
| trade liberalisation (F13) | poverty (I32) |