 Trade Openness and the Growth–Poverty Nexus: A Reappraisal with a New Openness IndicatorAsian Development Review (ADR), 2024, vol. 41, issue 02, 7-29 Abstract: Developing countries have greatly benefited from globalization, coinciding with economic growth and structural transformation. The standard trade theory postulates that trade openness contributes to poverty alleviation directly by changing factor proportions of production and indirectly through the trickle-down effect of growth. Existing multicountry studies using the trade-to-gross-domestic-product ratio to measure openness often fail to find a direct effect of openness on poverty over and above the growth–poverty nexus. This paper is motivated by the concern that the failure of these studies to detect the effectiveness of the factor proportion channel may be due to limitations of the commonly used measure of trade openness: the trade-to-gross-domestic-product ratio. Using a newly constructed index of trade openness, which I dub “the price convergence index,†I find a significant direct effect of openness on poverty reduction. The results also suggest that the impact of growth on poverty is greater for economies with more open trade regimes. Keywords: development; growth; openness; poverty; trade (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:wsi:adrxxx:v:41:y:2024:i:02:n:s0116110524400092 Ordering information: This journal article can be ordered from DOI: 10.1142/S0116110524400092 Access Statistics for this article Asian Development Review (ADR) is currently edited by Tetsushi Sonobe More articles in Asian Development Review (ADR) from World Scientific Publishing Co. Pte. Ltd. |
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