Does trade reduce poverty? A view from Africa☆

DOI

10.1016/j.joat.2014.06.001How to use a DOI?

Keywords

F02; F15; O11; O55

Abstract

Although trade liberalization is being actively promoted as a key component in development strategies, theoretically, the impact of trade openness on poverty reduction is ambiguous. On the one hand, a more liberalized trade regime is argued to change relative factor prices in favor of the more abundant factor. If poverty and relative low income stem from abundance of labor, greater trade openness should lead to higher labor prices and a decrease in poverty. However, should the re-allocation of factors be hampered, the expected benefits from freer trade may not materialize. The theoretical ambiguity on the effects of openness regarding the trade-poverty relationship is also apparent in the empirical literature. To resolve this ambiguity, this paper examines whether the effect of openness on poverty varies with some country characteristics. Using a panel of African countries over the period 1981–2010 and testing for non-linearities in the trade-poverty relationship, we find that trade openness tends to reduce poverty in countries where financial sectors are deep, education levels high and institutions strong.

Copyright

© 2014 Afreximbank. Production and hosting by Elsevier B.V. All rights reserved.

Open Access

This is an open access article under the CC BY-NC license (http://creativecommons.org/licences/by-nc/4.0/).

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TY  - JOUR
AU  - Maëlan Le Goff
AU  - Raju Jan Singh
PY  - 2014
DA  - 2014/07/23
TI  - Does trade reduce poverty? A view from Africa☆
JO  - Journal of African Trade
SP  - 5
EP  - 14
VL  - 1
IS  - 1-2
SN  - 2214-8523
UR  - https://doi.org/10.1016/j.joat.2014.06.001
DO  - 10.1016/j.joat.2014.06.001
ID  - LeGoff2014
ER  -