International trade and poverty

Devashish Mitra and Beyza Ural-Marchand

Chapter 25 in Elgar Encyclopedia of International Trade, 2026, pp 124-129 from Edward Elgar Publishing

Abstract: We first discuss various theoretical channels through which international trade can affect the incidence of poverty. These include channels working through (1) the impact of trade on average real incomes, based on the gains from specialization and exchange in standard trade models, (2) distributional channels in factor-proportion models that assume perfect factor mobility across sectors within a country and then with the alternative assumption of factor immobility, (3) complementarity and substitutability between imported inputs and various factors of production, and (4) the trade–growth nexus. We then discuss two main strands of the empirical literature on trade and poverty: (a) reduced-form approach and (b) empirical general-equilibrium welfare analysis. Reduced-form evidence is further of two kinds (i) two-step indirect evidence (impact of trade on real income, and then, of income on poverty), and (ii) the direct evidence on the relationship between trade and poverty. We finally suggest directions for future research.

Keywords: Openness; Poverty reduction; Welfare analysis; Growth; Distribution; Trade liberalization (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035327492
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