Trade, Growth, and Poverty

The evidence from individual cases and from cross-country analysis supports the view that globalization leads to faster growth and poverty reduction in poor countries. To determine the effect of globalization on growth, poverty, and inequality, the...

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Main Authors:	Dollar, David, Kraay, Aart
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ABSOLUTE POVERTY AVERAGE GROWTH AVERAGE GROWTH RATE AVERAGE INCOMES AVERAGE TARIFF AVERAGE TARIFFS BENCHMARK BUSINESS CYCLES CHANGES IN TRADE CIVIL WAR CLOSED ECONOMIES CLOSED ECONOMY CORRUPTION COUNTRIES COUNTRY REGRESSIONS CROSS-COUNTRY ANALYSIS CURRENCY CUSTOMS ADMINISTRATION DEMAND SHOCKS DEPENDENT VARIABLE DEVELOPED WORLD DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING WORLD DEVELOPMENT RESEARCH DISTRIBUTION DATA DISTRIBUTION EFFECT DISTRIBUTIONAL EFFECT ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC PERFORMANCE ECONOMIC POLICIES ECONOMIC REFORM ECONOMIC REFORMS ECONOMIC SYSTEMS ECONOMICS ECONOMICS PROFESSION ECONOMISTS EMPIRICAL GROWTH LITERATURE EMPIRICAL LITERATURE EMPIRICAL WORK ENDOGENOUS VARIABLES EQUAL EXCHANGE RATE EXPLANATORY VARIABLES EXPORT MARKETS EXPORTS FACTOR ENDOWMENTS FINANCIAL CRISIS FOREIGN TRADE GDP GINI COEFFICIENT GROWTH DETERMINANTS GROWTH EFFECT GROWTH PERFORMANCE GROWTH RATE GROWTH RATES GROWTH REGRESSION GROWTH REGRESSIONS HIGH INFLATION HOUSEHOLD SURVEYS IMPACT OF TRADE IMPORT TARIFFS IMPORTS INCOME DISTRIBUTION INCOME DISTRIBUTIONS INCOME INEQUALITY INCOME LEVELS INCOME SHARE INFLATION RATE INSTITUTIONAL QUALITY INSURANCE INTERNATIONAL MARKETS INTERNATIONAL TRADE INVESTMENT RATES LAGGED GROWTH LIVING STANDARDS LONG RUN MACRO STABILITY MEAN INCOME MEASURE OF TRADE MEASUREMENT ERROR MONETARY POLICY NATIONAL INCOME OPEN ECONOMIES PER CAPITA GROWTH PER CAPITA INCOME POINT ESTIMATE POLICY INTERVENTIONS POLICY VARIABLES POLITICAL INSTABILITY POLITICAL STABILITY POOR COUNTRIES POOR HOUSEHOLDS POPULOUS COUNTRIES POVERTY REDUCTION PRIVATE PROPERTY PROCESS OF CONVERGENCE PROPERTY RIGHTS PROTECTION MEASURES QUOTAS RAPID GROWTH REAL INCOME REDUCTION IN TARIFFS REGRESSION ANALYSES REGRESSION ANALYSIS REVERSE CAUSATION RICH COUNTRIES RULE OF LAW SAFETY NETS SAFETY STANDARDS SOCIAL PROTECTION STATISTICAL ANALYSIS TARIFF BARRIER TARIFF BARRIERS TARIFF DATA TARIFF RATE TARIFF RATES TARIFF REDUCTIONS TECHNOLOGICAL CHANGE TRADE BARRIERS TRADE DATA TRADE EXPANSION TRADE LIBERALIZATION TRADE MORE TRADE OPENNESS TRADE POLICIES TRADE POLICY TRADE REFORMS TRADE REGIMES TRADE VOLUMES TRANSITION COUNTRIES TRANSITION ECONOMIES TRANSPORT COSTS UNEMPLOYMENT VOLUME OF TRADE WORLD TRADE WORLD TRADE ORGANIZATION
Online Access:	http://documents.worldbank.org/curated/en/2001/06/1981832/trade-growth-poverty http://hdl.handle.net/10986/19597

id	okr-10986-19597
recordtype	oai_dc
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ABSOLUTE POVERTY AVERAGE GROWTH AVERAGE GROWTH RATE AVERAGE INCOMES AVERAGE TARIFF AVERAGE TARIFFS BENCHMARK BUSINESS CYCLES CHANGES IN TRADE CIVIL WAR CLOSED ECONOMIES CLOSED ECONOMY CORRUPTION COUNTRIES COUNTRY REGRESSIONS CROSS-COUNTRY ANALYSIS CURRENCY CUSTOMS ADMINISTRATION DEMAND SHOCKS DEPENDENT VARIABLE DEVELOPED WORLD DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING WORLD DEVELOPMENT RESEARCH DISTRIBUTION DATA DISTRIBUTION EFFECT DISTRIBUTIONAL EFFECT ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC PERFORMANCE ECONOMIC POLICIES ECONOMIC REFORM ECONOMIC REFORMS ECONOMIC SYSTEMS ECONOMICS ECONOMICS PROFESSION ECONOMISTS EMPIRICAL GROWTH LITERATURE EMPIRICAL LITERATURE EMPIRICAL WORK ENDOGENOUS VARIABLES EQUAL EXCHANGE RATE EXPLANATORY VARIABLES EXPORT MARKETS EXPORTS FACTOR ENDOWMENTS FINANCIAL CRISIS FOREIGN TRADE GDP GINI COEFFICIENT GROWTH DETERMINANTS GROWTH EFFECT GROWTH PERFORMANCE GROWTH RATE GROWTH RATES GROWTH REGRESSION GROWTH REGRESSIONS HIGH INFLATION HOUSEHOLD SURVEYS IMPACT OF TRADE IMPORT TARIFFS IMPORTS INCOME DISTRIBUTION INCOME DISTRIBUTIONS INCOME INEQUALITY INCOME LEVELS INCOME SHARE INFLATION RATE INSTITUTIONAL QUALITY INSURANCE INTERNATIONAL MARKETS INTERNATIONAL TRADE INVESTMENT RATES LAGGED GROWTH LIVING STANDARDS LONG RUN MACRO STABILITY MEAN INCOME MEASURE OF TRADE MEASUREMENT ERROR MONETARY POLICY NATIONAL INCOME OPEN ECONOMIES PER CAPITA GROWTH PER CAPITA INCOME POINT ESTIMATE POLICY INTERVENTIONS POLICY VARIABLES POLITICAL INSTABILITY POLITICAL STABILITY POOR COUNTRIES POOR HOUSEHOLDS POPULOUS COUNTRIES POVERTY REDUCTION PRIVATE PROPERTY PROCESS OF CONVERGENCE PROPERTY RIGHTS PROTECTION MEASURES QUOTAS RAPID GROWTH REAL INCOME REDUCTION IN TARIFFS REGRESSION ANALYSES REGRESSION ANALYSIS REVERSE CAUSATION RICH COUNTRIES RULE OF LAW SAFETY NETS SAFETY STANDARDS SOCIAL PROTECTION STATISTICAL ANALYSIS TARIFF BARRIER TARIFF BARRIERS TARIFF DATA TARIFF RATE TARIFF RATES TARIFF REDUCTIONS TECHNOLOGICAL CHANGE TRADE BARRIERS TRADE DATA TRADE EXPANSION TRADE LIBERALIZATION TRADE MORE TRADE OPENNESS TRADE POLICIES TRADE POLICY TRADE REFORMS TRADE REGIMES TRADE VOLUMES TRANSITION COUNTRIES TRANSITION ECONOMIES TRANSPORT COSTS UNEMPLOYMENT VOLUME OF TRADE WORLD TRADE WORLD TRADE ORGANIZATION
spellingShingle	ABSOLUTE POVERTY AVERAGE GROWTH AVERAGE GROWTH RATE AVERAGE INCOMES AVERAGE TARIFF AVERAGE TARIFFS BENCHMARK BUSINESS CYCLES CHANGES IN TRADE CIVIL WAR CLOSED ECONOMIES CLOSED ECONOMY CORRUPTION COUNTRIES COUNTRY REGRESSIONS CROSS-COUNTRY ANALYSIS CURRENCY CUSTOMS ADMINISTRATION DEMAND SHOCKS DEPENDENT VARIABLE DEVELOPED WORLD DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING WORLD DEVELOPMENT RESEARCH DISTRIBUTION DATA DISTRIBUTION EFFECT DISTRIBUTIONAL EFFECT ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC PERFORMANCE ECONOMIC POLICIES ECONOMIC REFORM ECONOMIC REFORMS ECONOMIC SYSTEMS ECONOMICS ECONOMICS PROFESSION ECONOMISTS EMPIRICAL GROWTH LITERATURE EMPIRICAL LITERATURE EMPIRICAL WORK ENDOGENOUS VARIABLES EQUAL EXCHANGE RATE EXPLANATORY VARIABLES EXPORT MARKETS EXPORTS FACTOR ENDOWMENTS FINANCIAL CRISIS FOREIGN TRADE GDP GINI COEFFICIENT GROWTH DETERMINANTS GROWTH EFFECT GROWTH PERFORMANCE GROWTH RATE GROWTH RATES GROWTH REGRESSION GROWTH REGRESSIONS HIGH INFLATION HOUSEHOLD SURVEYS IMPACT OF TRADE IMPORT TARIFFS IMPORTS INCOME DISTRIBUTION INCOME DISTRIBUTIONS INCOME INEQUALITY INCOME LEVELS INCOME SHARE INFLATION RATE INSTITUTIONAL QUALITY INSURANCE INTERNATIONAL MARKETS INTERNATIONAL TRADE INVESTMENT RATES LAGGED GROWTH LIVING STANDARDS LONG RUN MACRO STABILITY MEAN INCOME MEASURE OF TRADE MEASUREMENT ERROR MONETARY POLICY NATIONAL INCOME OPEN ECONOMIES PER CAPITA GROWTH PER CAPITA INCOME POINT ESTIMATE POLICY INTERVENTIONS POLICY VARIABLES POLITICAL INSTABILITY POLITICAL STABILITY POOR COUNTRIES POOR HOUSEHOLDS POPULOUS COUNTRIES POVERTY REDUCTION PRIVATE PROPERTY PROCESS OF CONVERGENCE PROPERTY RIGHTS PROTECTION MEASURES QUOTAS RAPID GROWTH REAL INCOME REDUCTION IN TARIFFS REGRESSION ANALYSES REGRESSION ANALYSIS REVERSE CAUSATION RICH COUNTRIES RULE OF LAW SAFETY NETS SAFETY STANDARDS SOCIAL PROTECTION STATISTICAL ANALYSIS TARIFF BARRIER TARIFF BARRIERS TARIFF DATA TARIFF RATE TARIFF RATES TARIFF REDUCTIONS TECHNOLOGICAL CHANGE TRADE BARRIERS TRADE DATA TRADE EXPANSION TRADE LIBERALIZATION TRADE MORE TRADE OPENNESS TRADE POLICIES TRADE POLICY TRADE REFORMS TRADE REGIMES TRADE VOLUMES TRANSITION COUNTRIES TRANSITION ECONOMIES TRANSPORT COSTS UNEMPLOYMENT VOLUME OF TRADE WORLD TRADE WORLD TRADE ORGANIZATION Dollar, David Kraay, Aart Trade, Growth, and Poverty
geographic_facet	East Asia and Pacific South Asia
relation	Policy Research Working Paper;No. 2615
description	The evidence from individual cases and from cross-country analysis supports the view that globalization leads to faster growth and poverty reduction in poor countries. To determine the effect of globalization on growth, poverty, and inequality, the authors first identify a group of developing countries that are participating more in globalization. China, India, and several other large countries are part of this group, so well over half the population of the developing world lives in these globalizing economies. Over the past 20 years, the post-1980 globalizers have seen large increases in trade and significant declines in tariffs. Their growth rates accelerated between the 1970s and the 1980s and again between the 1980s and the 1990s, even as growth in the rich countries and the rest of the developing world slowed. The post-1980 globalizers are catching up to the rich countries, but the rest of the developing world (the non-globalizers) is falling further behind. Next, the authors ask how general these patterns are, using regressions that exploit within-country variations in trade and growth. After controlling for changes in other policies and addressing endogeneity with internal instruments, they find that trade has a strong positive effect on growth. Finally, the authors examine the effects of trade on the poor. They find little systematic evidence of a relationship between changes in trade volumes (or any other measure of globalization they consider) and changes in the income share of the poorest-or between changes in trade volumes and changes in household income inequality. They conclude, therefore, that the increase in growth rates that accompanies expanded trade translates on average into proportionate increases in incomes of the poor. Absolute poverty in the globalizing developing economies has fallen sharply in the past 20 years. The evidence from individual cases and from cross-country analysis supports the view that globalization leads to faster growth and poverty reduction in poor countries.
format	Publications & Research :: Policy Research Working Paper
author	Dollar, David Kraay, Aart
author_facet	Dollar, David Kraay, Aart
author_sort	Dollar, David
title	Trade, Growth, and Poverty
title_short	Trade, Growth, and Poverty
title_full	Trade, Growth, and Poverty
title_fullStr	Trade, Growth, and Poverty
title_full_unstemmed	Trade, Growth, and Poverty
title_sort	trade, growth, and poverty
publisher	World Bank, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2001/06/1981832/trade-growth-poverty http://hdl.handle.net/10986/19597
_version_	1764440126257102848
spelling	okr-10986-195972021-04-23T14:03:43Z Trade, Growth, and Poverty Dollar, David Kraay, Aart ABSOLUTE POVERTY AVERAGE GROWTH AVERAGE GROWTH RATE AVERAGE INCOMES AVERAGE TARIFF AVERAGE TARIFFS BENCHMARK BUSINESS CYCLES CHANGES IN TRADE CIVIL WAR CLOSED ECONOMIES CLOSED ECONOMY CORRUPTION COUNTRIES COUNTRY REGRESSIONS CROSS-COUNTRY ANALYSIS CURRENCY CUSTOMS ADMINISTRATION DEMAND SHOCKS DEPENDENT VARIABLE DEVELOPED WORLD DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING WORLD DEVELOPMENT RESEARCH DISTRIBUTION DATA DISTRIBUTION EFFECT DISTRIBUTIONAL EFFECT ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC PERFORMANCE ECONOMIC POLICIES ECONOMIC REFORM ECONOMIC REFORMS ECONOMIC SYSTEMS ECONOMICS ECONOMICS PROFESSION ECONOMISTS EMPIRICAL GROWTH LITERATURE EMPIRICAL LITERATURE EMPIRICAL WORK ENDOGENOUS VARIABLES EQUAL EXCHANGE RATE EXPLANATORY VARIABLES EXPORT MARKETS EXPORTS FACTOR ENDOWMENTS FINANCIAL CRISIS FOREIGN TRADE GDP GINI COEFFICIENT GROWTH DETERMINANTS GROWTH EFFECT GROWTH PERFORMANCE GROWTH RATE GROWTH RATES GROWTH REGRESSION GROWTH REGRESSIONS HIGH INFLATION HOUSEHOLD SURVEYS IMPACT OF TRADE IMPORT TARIFFS IMPORTS INCOME DISTRIBUTION INCOME DISTRIBUTIONS INCOME INEQUALITY INCOME LEVELS INCOME SHARE INFLATION RATE INSTITUTIONAL QUALITY INSURANCE INTERNATIONAL MARKETS INTERNATIONAL TRADE INVESTMENT RATES LAGGED GROWTH LIVING STANDARDS LONG RUN MACRO STABILITY MEAN INCOME MEASURE OF TRADE MEASUREMENT ERROR MONETARY POLICY NATIONAL INCOME OPEN ECONOMIES PER CAPITA GROWTH PER CAPITA INCOME POINT ESTIMATE POLICY INTERVENTIONS POLICY VARIABLES POLITICAL INSTABILITY POLITICAL STABILITY POOR COUNTRIES POOR HOUSEHOLDS POPULOUS COUNTRIES POVERTY REDUCTION PRIVATE PROPERTY PROCESS OF CONVERGENCE PROPERTY RIGHTS PROTECTION MEASURES QUOTAS RAPID GROWTH REAL INCOME REDUCTION IN TARIFFS REGRESSION ANALYSES REGRESSION ANALYSIS REVERSE CAUSATION RICH COUNTRIES RULE OF LAW SAFETY NETS SAFETY STANDARDS SOCIAL PROTECTION STATISTICAL ANALYSIS TARIFF BARRIER TARIFF BARRIERS TARIFF DATA TARIFF RATE TARIFF RATES TARIFF REDUCTIONS TECHNOLOGICAL CHANGE TRADE BARRIERS TRADE DATA TRADE EXPANSION TRADE LIBERALIZATION TRADE MORE TRADE OPENNESS TRADE POLICIES TRADE POLICY TRADE REFORMS TRADE REGIMES TRADE VOLUMES TRANSITION COUNTRIES TRANSITION ECONOMIES TRANSPORT COSTS UNEMPLOYMENT VOLUME OF TRADE WORLD TRADE WORLD TRADE ORGANIZATION The evidence from individual cases and from cross-country analysis supports the view that globalization leads to faster growth and poverty reduction in poor countries. To determine the effect of globalization on growth, poverty, and inequality, the authors first identify a group of developing countries that are participating more in globalization. China, India, and several other large countries are part of this group, so well over half the population of the developing world lives in these globalizing economies. Over the past 20 years, the post-1980 globalizers have seen large increases in trade and significant declines in tariffs. Their growth rates accelerated between the 1970s and the 1980s and again between the 1980s and the 1990s, even as growth in the rich countries and the rest of the developing world slowed. The post-1980 globalizers are catching up to the rich countries, but the rest of the developing world (the non-globalizers) is falling further behind. Next, the authors ask how general these patterns are, using regressions that exploit within-country variations in trade and growth. After controlling for changes in other policies and addressing endogeneity with internal instruments, they find that trade has a strong positive effect on growth. Finally, the authors examine the effects of trade on the poor. They find little systematic evidence of a relationship between changes in trade volumes (or any other measure of globalization they consider) and changes in the income share of the poorest-or between changes in trade volumes and changes in household income inequality. They conclude, therefore, that the increase in growth rates that accompanies expanded trade translates on average into proportionate increases in incomes of the poor. Absolute poverty in the globalizing developing economies has fallen sharply in the past 20 years. The evidence from individual cases and from cross-country analysis supports the view that globalization leads to faster growth and poverty reduction in poor countries. 2014-08-21T19:56:21Z 2014-08-21T19:56:21Z 2001-06 http://documents.worldbank.org/curated/en/2001/06/1981832/trade-growth-poverty http://hdl.handle.net/10986/19597 English en_US Policy Research Working Paper;No. 2615 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research East Asia and Pacific South Asia

Trade, Growth, and Poverty

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