Revisiting the trade-poverty nexus in developing countries

Patrick N. Osakwe and Olga Solleder

No #10, UNCTAD Working Papers from United Nations Conference on Trade and Development

Abstract: This paper revisits the relationship between trade and poverty in developing countries using panel data and advanced estimation techniques that account for omitted variable bias. It finds strong evidence that higher trade dependence, measured by a greater trade-to-GDP ratio, reduces poverty in developing countries, but this effect is not statistically significant in Africa. The study also finds that trade reforms, measured by changes in tariffs, do not have a systematic effect on poverty in either developing countries or Africa. While trade is a necessary condition for poverty reduction, it is not sufficient on its own; country-specific characteristics significantly influence whether the potential benefits of trade can be realized in any given context.

Date: 2025
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