Trade Openness, Inequality and Poverty in Latin American Countries

Bayar, Yılmaz; Sart, Gamze

doi:10.15388/ekon.2017.1.10663

“…The finding is in line with theoretical propositions linking trade to poverty alleviation through transmission mechanisms such as economic growth (Shuaibu, 2017) skill-biased technological change (Nissanke & Thorbecke, 2010) changes in prices faced by households (Winters et al, 2004), employment and wages (Goldberg & Pavcnik, 2007b). Empirically this is in tandem with several studies (including (Bayar & Sezgin, 2017;Kis-Katos & Sparrow, 2015;Onakoya et al, 2019;Zahonogo, 2016)).…”

Section: Generalised Methods Of Moments (Gmm) Estimation Resultssupporting

confidence: 83%

The Impact of Trade on Poverty in Sub-Saharan Africa: Do Sources Matter?

Sunge¹,

Kumbula²,

Makamba³

2021

International Journal of Business, Economics and Management

0

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Global trade development has provided noteworthy global poverty gains since the 1990s. Accordingly, Africa has gradually engaged itself in trade and trade policy reforms through multilateral and regional trade agreements among other initiatives. Nonetheless, poverty levels in the Sub-Saharan Africa (SSA) region remain relatively high. Recognizing that existing evidence on trade-poverty nexus is based on aggregate trade, we provide a new perspective on SSA by disaggregating trade by sources for the period 2003-2017. We employed the Generalised Method of Moments (GMM) estimation of a panel data model derived from the Modified Basic Household Model and Neo-Conservative Poverty Theory for analysis. The results document poverty gains from trade liberalization, with the extent varying according to sources. Specifically, trade from MENA and within SSA was found to offer more gains. Furthermore, findings suggest that poverty gains from trade are strengthened with better institutional quality. It follows that to accelerate poverty gains from trade liberalization, SSA should promote intra-Africa trade as well as trade with MENA countries. To accelerate the gains, Africa has to invest in better institutions, in particular, to improve governance and corruption eradication. Contribution/Originality:This study contributes to existing literature on trade-poverty nexus in two ways.Firstly, instead of basing conclusions on aggregate trade, we focus on trade by sources. We disaggregate SSA's trade by regional sources. Secondly, we introduce control of corruption interaction term to control for institutional quality in the analysis. INTRODUCTIONDespite the worldwide poverty rate having immensely reduced since 2000, poverty alleviation remains topical.The United Nations, through the Sustainable Development Goals (SDGs), places poverty eradication at the top of the global development agenda. SDG number one envisages ending extreme poverty in all forms by 2030. The African Union Commission (AUC) Agenda 2063's aspiration for "a high standard of living, quality of life and wellbeing for all citizens" (New Partnership for Africa's Development (NEPAD, 2019) targets an end to poverty as a priority. The World Bank and World Trade Organisation (WB and WTO, 2019) recognize trade liberalization as an avenue to eradicate poverty.

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“…The finding is in line with theoretical propositions linking trade to poverty alleviation through transmission mechanisms such as economic growth (Shuaibu, 2017) skill-biased technological change (Nissanke & Thorbecke, 2010) changes in prices faced by households (Winters et al, 2004), employment and wages (Goldberg & Pavcnik, 2007b). Empirically this is in tandem with several studies (including (Bayar & Sezgin, 2017;Kis-Katos & Sparrow, 2015;Onakoya et al, 2019;Zahonogo, 2016)).…”

Section: Generalised Methods Of Moments (Gmm) Estimation Resultssupporting

confidence: 83%

Untitled

2021

International Journal of Business, Economics and Management

0

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Global trade development has provided noteworthy global poverty gains since the 1990s. Accordingly, Africa has gradually engaged itself in trade and trade policy reforms through multilateral and regional trade agreements among other initiatives. Nonetheless, poverty levels in the Sub-Saharan Africa (SSA) region remain relatively high. Recognizing that existing evidence on trade-poverty nexus is based on aggregate trade, we provide a new perspective on SSA by disaggregating trade by sources for the period 2003-2017. We employed the Generalised Method of Moments (GMM) estimation of a panel data model derived from the Modified Basic Household Model and Neo-Conservative Poverty Theory for analysis. The results document poverty gains from trade liberalization, with the extent varying according to sources. Specifically, trade from MENA and within SSA was found to offer more gains. Furthermore, findings suggest that poverty gains from trade are strengthened with better institutional quality. It follows that to accelerate poverty gains from trade liberalization, SSA should promote intra-Africa trade as well as trade with MENA countries. To accelerate the gains, Africa has to invest in better institutions, in particular, to improve governance and corruption eradication. Contribution/Originality:This study contributes to existing literature on trade-poverty nexus in two ways.Firstly, instead of basing conclusions on aggregate trade, we focus on trade by sources. We disaggregate SSA's trade by regional sources. Secondly, we introduce control of corruption interaction term to control for institutional quality in the analysis. INTRODUCTIONDespite the worldwide poverty rate having immensely reduced since 2000, poverty alleviation remains topical.The United Nations, through the Sustainable Development Goals (SDGs), places poverty eradication at the top of the global development agenda. SDG number one envisages ending extreme poverty in all forms by 2030. The African Union Commission (AUC) Agenda 2063's aspiration for "a high standard of living, quality of life and wellbeing for all citizens" (New Partnership for Africa's Development (NEPAD, 2019) targets an end to poverty as a priority. The World Bank and World Trade Organisation (WB and WTO, 2019) recognize trade liberalization as an avenue to eradicate poverty.

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“…Therefore, we could say that public health spending has a greater effect on reducing poverty in countries with poor governance than in countries with good governance. As shown in Figure 1 Bayar & Sezgin (2017), concluding that the relationship between trade and poverty is not significant.…”

Section: Discussionmentioning

confidence: 85%

“…In addition, trade grows the economy of a country, and economic growth leads to optimal revenue. Higher expenditure proportionate to the need to alleviate poverty is possible supposing the income of the country is higher Bayar & Sezgin (2017). have found that trade openness and improvement in the financial sector play a significant role in reducing poverty.…”

mentioning

confidence: 99%

Public Health Spending, Governance Quality and Poverty Alleviation

Komarudin¹,

Oak²

2020

ECON FINANC INDONES

3

1

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Poverty alleviation has become the main priority program in most developing countries. This research empirically studies the correlation between public health spending, governance quality, and poverty alleviation in developing countries. The panel data were estimated via a random-effects (RE) model and robustness check using instrumental variables (IV) (two-stage least-squares [2SLS]) and first-difference generalized method of moments (GMM) because of the endogeneity problem. The results suggest that public health spending has a significant effect on reducing the poverty rate, and that countries with better governance tend to reduce poverty than countries with poor governance. Increasing public health spending by one percentage point may reduce poverty by 0.48 percentage points in countries with good governance supposing the governance quality influences public health spending. Conversely, in countries with poor governance, the poverty headcount ratio may decline by 1.375 percentage points when public health spending increases by one percentage point.

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Trade Openness, Inequality and Poverty in Latin American Countries

Cited by 10 publications

References 19 publications

The Impact of Trade on Poverty in Sub-Saharan Africa: Do Sources Matter?

The Impact of Trade on Poverty in Sub-Saharan Africa: Do Sources Matter?

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Public Health Spending, Governance Quality and Poverty Alleviation

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