Trade Liberalization and Poverty: The Evidence So Far

By L. A. Winters, N. McCulloch, A. McKay. 2004

1,180 citations recorded by the source corpus.

This paper assesses the current state of evidence on the impact of trade policy reform on poverty in developing countries. There is little empirical evidence addressing this question directly, but a lot of related evidence on specific aspects. We summarize this evidence using an analytic framework addressing four key areas: economic growth and stability; households and markets; wages and employment and government revenue. Twelve key questions are identified and empirical studies and results are discussed. We argue that there is no simple generalizable conclusion about the relationship between trade liberalization and poverty, and the picture is much less negative than is often suggested. In the long run and on average, trade liberalization is likely to be strongly poverty alleviating, and there is no convincing evidence that it will generally increase overall poverty or vulnerability. But there is evidence that the poor may be less well placed in the short run to protect themselves against adverse effects and take advantage of favorable opportunities.

Subfields: Economics and Econometrics, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/e6e1aff0659d869402b10c3cb748ab9c188f626a

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Citations in the corpus

Predicting the poverty impacts of trade reform (2004, background): “In their survey of the empirical evidence on trade liberalization, Winters et al. (2004) highlight the important role of transactions costs between the border and the consumer or producer.”
Trade, Inequality, and Poverty: What Do We Know? (2004, background): “22Similarly, Winters, McCulloch, and McKay (2004) emphasize the importance of understanding how international shocks are transmitted to producers and consumers within a country in trade and poverty analysis.”
Trade, Standards, and Poverty: Evidence from Senegal (2009, background): “None of these studies actually measures 1 See Rodriguez and Rodrik (2001) for a critique on this conclusion and Winters et al (2004) for a survey of the arguments.”
Rising Income Inequality: Technology, or Trade and Financial Globalization? (2008, positive): “those where opportunities are better can also be expected to improve the distribution of income (see Topalova, 2007 ).”
Does economic globalisation affect income inequality? A meta‐analysis (2020, background): “This section does not provide a comprehensive review of the theoretical literature regarding the links between economic globalisation and income inequality; excellent review papers are abundant (e.g. Burtless 1995; Ravallion 2003; Winters et al. 2004; Anderson 2005; Mills 2009; Demirguc-Kunt and Lev”
Recent trends in inequality and poverty in developing countries (2013, background): “The theoretical channels linking these changes to inequality are multiple and complex, which accounts for the lack of conclusive empirical results (Wood, 1997; Rama, 2003; Winters et al., 2004; Anderson, 2005; Goldberg and Pavcnik, 2007; Harrison et al., 2011).”
Aid, Aid for Trade, and bilateral trade: An empirical study (2013, background): “For studies on the effects of trade (openness) on development, see Lee, Ricci, and Rigobon (2004) and Winters, McCulloch, and McKay (2004).”
Looking Beyond Averages in the Trade and Poverty Debate (2004, neutral): “No attempt is made to comprehensively review the literature; for that see Winters et al. (2004).”
Does aid for trade enhance export performance? Investigating on the infrastructure channel (2012, background): “Introduction In the empiric literature it has been demonstrated that trade can be a powerful engine to enhance economic development and poverty reduction (Winters et al., 2004).”
The Right Price of Food: Reflections on the Political Economy of Policy Analysis and Communication (2011, neutral): “40 For surveys and overviews of model improvements and their insights, see e.g. Anderson and Martin, 2007; Anderson et al 2010; Ivanic and Martin, 2008; Hertell et al 2007, 2009; Hertell and Reimer, 2005; Winters et al 2004.”
Globalization and Poverty in Senegal: A Worst Case Scenario? (2011, background): “…lack of consensus has induced a call for more convincing empirical evidence on the link between globalization and poverty dynamics at the household level (Winters et al., 2004, pp.107) and for evidence from country casestudies – rather than cross-country regressions (Srinvasan and Bhagwati, 2001).”
Openness, inequality and poverty: Endowments matter (2006, neutral): “…in unskilled labor.1 In contrast to this agnosticism, following an exhaustive review of the evidence on trade liberalization and poverty, Winters et al. (2004) conclude that trade liberalization might be the easiest poverty-alleviating reform to accomplish, and the most powerful direct…”