Regional Integration and Poverty: A Review of the Transmission Channels and the Evidence

Abstract

While there is an extensive literature on the impact of regional trading agreements on trade and capital flows, as well as on the relationship between international trade, growth, and poverty there is comparatively little treatment of the possible linkages between regional integration and poverty. We analyze the channels through which regional integration could impact on poverty, and then review the existing evidence on the impact of regional integration on poverty. We focus on two key characteristics that make any regional integration process different from unilateral and multilateral liberalization: first, the asymmetric nature of the liberalization process; second, the scope or ambition of the regional liberalization being undertaken and the nature of the institutional arrangements that are put into place to manage the process of regional integration. We also distinguish between short, medium, and long run effects on poverty of regional integration processes. There is some direct evidence explicitly linking regional integration and poverty, but in good part the shedding of the light depends on an indirect literature on trade, FDI, migration, and inequality.

Sectoral FTA gains, conflicts, and the role of interindustry factor mobility: Evidence from Korea's free trade agreement

“…It contrasts with the extant literature, which has examined the impact of FTAs on trade or economic growth of a single or group of countries (Baier & Bergstrand, 2007; Hur & Park, 2012; S.‐C. Lee, 2018; Martuscelli & Gasiorek, 2019; Sohn & Lee, 2010).…”

“…Other studies investigated the impact of Korea's FTA network on a single industry (e.g., seaborne logistics) (Inkyo Cheong & Cho, 2013). It contrasts with the extant literature, which has examined the impact of FTAs on trade or economic growth of a single or group of countries (Baier & Bergstrand, 2007;Hur & Park, 2012;S.-C. Lee, 2018;Martuscelli & Gasiorek, 2019;Sohn & Lee, 2010).…”

The Effect of Financial Globalization on Economic Instability: The Case of the Global Financial Crisis

“…In this type, the transmission channels for the impact on poverty are changes in prices (inflation), the number of employment opportunities, and income levels. The community groups most vulnerable to this type of crisis are farmers and their families, farm workers and their families, and in the next rank are workers and business owners and their families in other sectors related through production to the agricultural subsector (Martuscelli & Gasiorek, 2019).…”

Impact of international trade on the income gaps between formal and informal sectors: Evidence from China

“…Over the past two decades, two global phenomena have been observed: an increase in international trade and a growth in income inequality (Borr & Knauth, 2021;Dorn et al, 2022;Sicular et al, 2020;Siddique, 2021). It is believed that international trade can reallocate advantageous resources to promote economic growth (Bardi & Hfaiedh, 2021;Gunby et al, 2017) and reduce poverty in developing countries (Le et al, 2019;Martuscelli & Gasiorek, 2019).…”