Do the Poor Benefit from Globalization Regardless of Institutional Quality?

Posted: 7 Jul 2016

See all articles by Andreas Bergh

Andreas Bergh

Research Institute of Industrial Economics (IFN); Lund University - Department of Economics

Irina Mirkina

Lund University - Department of Economics

Therese Nilsson

Research Institute of Industrial Economics (IFN); Lund University - Department of Economics

Date Written: July 7, 2016

Abstract

Despite significant progress towards the Millennium goals, more than one billion people live on less than 1.25 US dollars per day. Previous research suggests that globalization stimulates poverty reduction, but does not investigate what role institutions play in this relationship. Theoretically, globalization could act as either a complement or a substitute to institutional quality in reducing poverty. We find that the poverty-reducing effect of globalization is stronger when institutions are weak. In particular, increasing social globalization reduces poverty more when corruption is high and democratic accountability is low. Thus, globalization has the power to reduce poverty even in countries with low institutional quality.

Keywords: absolute poverty, globalization, institutions, information flows

JEL Classification: D30, F15, I32

Suggested Citation

Bergh, Andreas and Mirkina, Irina and Nilsson, Therese, Do the Poor Benefit from Globalization Regardless of Institutional Quality? (July 7, 2016). Applied Economics Letters, Vol. 23, No. 10, 2016, Available at SSRN: https://ssrn.com/abstract=2805821

Andreas Bergh

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34 2nd floor
Stockholm, SE-102 15
Sweden
0707790734 (Phone)

HOME PAGE: http://www.ifn.se/web/AndreasB

Lund University - Department of Economics ( email )

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S-220 07
Lund
Sweden

HOME PAGE: http://www.nek.lu.se/

Irina Mirkina (Contact Author)

Lund University - Department of Economics ( email )

P.O. Box 7082
S-220 07 Lund
Sweden

Therese Nilsson

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Lund University - Department of Economics ( email )

P.O. Box 7082
S-220 07 Lund
Sweden
+46 46 222 46 43 (Phone)

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