Trade Liberalization and Poverty: What We Know and Don't Know

Abstract

Strong opinions about the impact of globalization on poverty are not always backed by robust factual evidence. As argued in this paper, however, it is not all that easy to lay our hands on robust facts. Quantitative analyses of trade liberalization appear highly sensitive to basic modelling and parameter assumptions. Altering these could turn the expectation that, for instance, Africa's poor stand to gain from further trade opening under the Doha Round into one in which they would stand to lose. Most studies agree though that trade opening probably adds to aggregate welfare, but gains are small and unevenly distributed.

Keywords: Computable General Equilibrium Models, Trade Policy, Economic Integration, Trade and Labour Market Interactions, Welfare and Poverty, International Linkages to Development, Foreign Exchange Policy

JEL Classification: C68, F13, F15, F16, I3, O19, O24