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.

Summary. -Discussions of chronic poverty have mostly considered its monetary dimensions, with current evidence suggesting that such poverty is much more transient than chronic. But chronic poverty is a real and important phenomenon, potentially more important quantitatively than it first appears once account is taken of different methodological approaches and inevitable measurement difficulties. The chronic poor have distinctive characteristics, such as lack of assets or high dependency rates, which may account for their persistent poverty. The paper argues that it is also necessary to develop concepts of chronic poverty further, covering relevant nonmonetary dimensions and not just relying on panel data.

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Joint Global Health Trials scheme (from the Wellcome Trust, the UK Medical Research Council, and UK Aid).

This paper surveys the theoretical and empirical literature on the effect of economic and political inequality on institutions. The current understanding suggests that unequal societies develop exploitative and inefficient institutions. Empirical research-which is scant, and has mainly concentrated at cross-national level-supports, to some extent, the existence of an inverse relationship between inequality and institutions, but more analysis is needed. Future empirical research should undertake country, state, and micro-level analysis, which are a necessary complement to aggregate level studies. The effect of inequality could also take place indirectly, through the influence of inequality on democratization.

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