Would Freeing Up World Trade Reduce Poverty and Inequality? The Vexed Role of Agricultural Distortions

Trade policy reforms in recent decades have sharply reduced the distortions that were harming agriculture in developing countries, yet global trade in farm products continues to be far more distorted than trade in nonfarm goods. Those distortions reduce some forms of poverty and inequality but worsen others, so the net effects are unclear without empirical modeling. This paper summarizes a series of new economy-wide global and national empirical studies that focus on the net effects of the remaining distortions to world merchandise trade on poverty and inequality globally and in various developing countries. The global LINKAGE model results suggest that removing those remaining distortions would reduce international inequality, largely by boosting net farm incomes and raising real wages for unskilled workers in developing countries, and would reduce the number of poor people worldwide by 3 percent. The analysis based on the Global Trade Analysis Project model for a sample of 15 countries, and nine stand-alone national case studies, all point to larger reductions in poverty, especially if only the non-poor are subjected to increased income taxation to compensate for the loss of trade tax revenue.

Bibliographic Details

Main Authors:	Cockburn, John, Anderson, Kym, Martin, Will
Language:	English
Published:	2011-03-01
Subjects:	ADVERSE EFFECT, AGRICULTURAL DEVELOPMENT, AGRICULTURAL LAND, AGRICULTURAL LIBERALIZATION, AGRICULTURAL POLICY, AGRICULTURAL PRODUCTS, AGRICULTURAL SECTOR, AGRICULTURAL TRADE, AGRICULTURE, AVERAGE INCOME, AVERAGE INCOMES, BENCHMARK, BENCHMARK DATA, BENEFITS OF TRADE, CAPITAL OWNERS, CLIMATE CHANGE, COMMERCIAL FARMERS, COMMODITY, COMMUNICATION TECHNOLOGY, CONSTANT RETURNS TO SCALE, CONSUMER DEMAND, CONSUMER PRICE INDEX, CONSUMERS, COST OF CAPITAL, COUNTRY CASE, COUNTRY INEQUALITY, CUSTOMS, CUSTOMS REVENUE, DEBT, DEMAND CURVE, DEVELOPED COUNTRIES, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPMENT ASSISTANCE, DEVELOPMENT ECONOMICS, DEVELOPMENT GOALS, DEVELOPMENT POLICY, DEVELOPMENT RESEARCH, DISTRIBUTION OF INCOME, DIVIDEND, ECONOMETRIC ANALYSIS, ECONOMETRICS, ECONOMIC GROWTH, ECONOMIC IMPLICATIONS, ECONOMIC INTEGRATION, ECONOMIC POLICY, ECONOMIC SIZE, ECONOMIES OF SCALE, ELASTICITY, ELASTICITY OF SUBSTITUTION, EMERGING ECONOMIES, EMPIRICAL EVIDENCE, EMPIRICAL STUDIES, EXPORT DEMAND, EXPORT PRICES, EXPORT TAXES, EXPORTS, EXTERNAL TRADE, EXTREME POVERTY, EXTREMELY POOR PEOPLE, FACTOR PRICES, FARM HOUSEHOLDS, FARM INCOME, FARM INCOMES, FARM PRODUCTS, FARM WORK, FARM WORKERS, FARMERS, FINANCIAL CRISIS, FINANCIAL INTEGRATION, FOOD MARKETS, FOOD PRICE, FOOD PRICES, FOREIGN CURRENCY, FOREIGN DEBT, FREE ACCESS, GDP, GDP PER CAPITA, GENERAL EQUILIBRIUM, GENERAL EQUILIBRIUM ANALYSIS, GINI COEFFICIENT, GLOBAL ECONOMIC PROSPECTS, GLOBAL ECONOMY, GLOBAL MARKETS, GLOBAL POVERTY, GLOBAL TRADE, GLOBALIZATION, GOVERNMENT BUDGETS, HOUSEHOLD CONSUMPTION, HOUSEHOLD INCOME, HOUSEHOLD SURVEY, HOUSEHOLD SURVEYS, HOUSEHOLD WELFARE, IMPORT BARRIERS, IMPORT COMPETITION, IMPORT RESTRICTIONS, IMPORT TARIFFS, IMPORTS, INCIDENCE OF POVERTY, INCOME, INCOME DISTRIBUTION, INCOME DYNAMICS, INCOME GAINS, INCOME INEQUALITY, INCOME TAX, INCOME TAXES, INCOME-GENERATING ACTIVITIES, INCREASE GROWTH, INCREASE POVERTY, INDIVIDUAL COUNTRIES, INEQUALITY, INEQUALITY RESULTS, INFRASTRUCTURE INVESTMENTS, INTERNATIONAL CAPITAL, INTERNATIONAL CAPITAL FLOWS, INTERNATIONAL TRADE, LABOR MARKET, LOW-INCOME COUNTRIES, MACROECONOMIC POLICIES, MARKET ACCESS, MONOPOLISTIC COMPETITION, MULTILATERAL AGREEMENTS, MULTILATERAL TRADE, MULTILATERAL TRADE AGREEMENTS, MULTILATERAL TRADE NEGOTIATIONS, MULTILATERAL TRADE REFORM, NATIONAL ECONOMIES, NATIONAL MODELS, NATIONAL POVERTY, NON-POOR HOUSEHOLDS, NONFARM INCOME, PARTIAL EQUILIBRIUM ANALYSIS, PARTICULAR COUNTRIES, PARTICULAR COUNTRY, POLICY CHANGES, POLICY IMPLICATIONS, POLICY MEASURES, POLICY RESEARCH, POLITICAL ECONOMY, POLITICAL ECONOMY ANALYSIS, POOR, POOR HOUSEHOLDS, POOR PEOPLE, POVERTY ALLEVIATION, POVERTY ANALYSIS, POVERTY CHANGES, POVERTY HEADCOUNT INDEX, POVERTY IMPACT, POVERTY INCREASES, POVERTY LINE, POVERTY LINES, POVERTY RATE, POVERTY RATES, POVERTY REDUCING, POVERTY REDUCTION, PRICE DISTORTION, PRICE DISTORTIONS, PRICE INCREASES, PRO-POOR, PRODUCT MARKETS, PROTECTIONIST, RAPID GROWTH, RATE OF RETURN, REAL GDP, REAL INCOME, REDUCING POVERTY, RELATIVE IMPORTANCE, RURAL, RURAL AREAS, RURAL BASE, RURAL DEVELOPMENT, RURAL HOUSEHOLDS, RURAL HUMAN CAPITAL, RURAL INCOME, RURAL INEQUALITY, RURAL POOR, RURAL POVERTY, RURAL TOWNS, SKILLED WORKERS, SOCIAL PROGRAMS, SOCIAL WELFARE, SUBSISTENCE FARMERS, TARIFF PROTECTION, TARIFF REVENUE, TAX POLICY, TAX REVENUE, TAX REVENUES, TAXATION, TERMS OF TRADE, TRADE BARRIERS, TRADE DISTORTIONS, TRADE IN SERVICES, TRADE LIBERALIZATION, TRADE NEGOTIATIONS, TRADE POLICIES, TRADE POLICY, TRADE POLICY REFORM, TRADE POLICY REFORMS, TRADE REFORMS, TRADE TAX, TRADE TAXES, TRADE-DISTORTING POLICIES, TREASURY, UNEMPLOYMENT, UNSKILLED LABOR, URBAN AREAS, URBAN POOR, URBAN POVERTY, URBANIZATION, VALUE ADDED, VOLATILITY, WAGES, WEALTH, WORLD ECONOMY, WORLD MARKETS, WORLD TRADE, WORLD TRADE ORGANIZATION, WTO,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110321092321 https://hdl.handle.net/10986/3369
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