DP2382 | Trade, Trade Policy and Poverty: What Are The Links?

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29/02/2000

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Abstract

This paper traces the links from trade shocks to poverty in developing countries. It considers the determinants of household and individual welfare (including potential differences between household members) and then identifies six trade-to-poverty links: the extent to which prices change and the effect of changes on the poor; links via factor markets (especially employment and wages); changes in government revenue and expenditure; changes in risk and vulnerability; effects on economic growth; and adjustment strains. There are no general results, but among the most important issues to check in each case are: whether trade reform destroys markets or creates new ones, how it affects the ability to bear risk, how labour demand shocks divide between wage and employment effects, and the country's comparative advantage.