Globalization and poverty

There's a new paper from the NBER which should improve the quality of debate about globalization and poverty. Some highlights:

Impediments to exports from developing countries exacerbate poverty in those countries. Developing countries need access to developed country markets. The evidence shows a clear link between export activity and poverty reduction...

Simple interpretations of general equilibrium trade models such as the Hecksher-Ohlin framework are likely to be incorrect.

There are losers among the poor from trade reform. Poor workers in import-competing sectors - who cannot relocate possibly due to the existence of inflexible labour laws - are likely to be hurt by globalization.

Globalization has been accompanied by increasing inequality within developing countries. One implication is that rising inequality induced by globalization offsets some of the poverty reduction achieved via trade-induced growth.

Relying on trade or foreign investment alone is not enough...The poor need better education, access to infrastructure, access to credit for investing in technology improvements, and the ability to relocate out of contracting sectors.

Here's an earlier version (pdf) of the paper. It's the introduction to a forthcoming book, draft chapters of which are here. And here are more papers by the author Ann Harrison.

Comments

[dearieme]

Proposition: the best possible use of "foreign aid" money would be to put it to "buying out" the web of rent-seekers in the EU, USA and Japan who have got us into the tangle of quotas, agricultural subsidies and so forth.