Le Goff, MaëlanSingh, Raju Jan2013-01-282013-01-282013-01https://hdl.handle.net/10986/12165Although trade liberalization is being actively promoted as a key component in development strategies, theoretically, the impact of trade openness on poverty reduction is ambiguous. A more liberalized trade regime is argued to change relative factor prices in favor of the more abundant factor. If poverty and relative low income stem from abundance of labor, greater trade openness should lead to higher labor prices and a decrease in poverty. However, should the re-allocation of factors be hampered, the expected benefits from freer trade may not materialize. The theoretical ambiguity on the effects of openness is reflected in the available empirical evidence. This paper examines how the effect of trade openness on poverty may depend on complementary reforms that help a country take advantage of international competition. Using a non-linear regression specification that interacts a proxy of trade openness with proxies of various country structural specificities and a panel of 30 African countries over the period 1981-2010, the analysis finds that trade openness tends to reduce poverty in countries where financial sectors are deep, education levels high and governance strong.en-USCC BY 3.0 IGOABSOLUTE POVERTYABSOLUTE VALUEAVERAGE TRADEBARRIERS TO ENTRYBENEFITS OF TRADEBONDCAPITAL ACCUMULATIONCAPITAL GOODSCOMPARATIVE ADVANTAGECOMPETITION POLICYCONSUMER PRICE INDEXCONSUMER PRICESCOUNTRY CHARACTERISTICSCOUNTRY LEVELCOUNTRY RISKCROSS-COUNTRY ANALYSISDEPENDENT VARIABLEDEVELOPED WORLDDEVELOPING COUNTRIESDEVELOPING ECONOMIESDEVELOPMENT ECONOMICSDEVELOPMENT INDICATORSDEVELOPMENT POLICYDEVELOPMENT RESEARCHDEVELOPMENT STRATEGIESDOMESTIC CREDITDYNAMIC PANELECONOMETRIC ANALYSISECONOMETRICSECONOMIC ACTIVITYECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC INTEGRATIONECONOMIC LITERATUREECONOMIC POLICYECONOMIC REFORMECONOMIC STUDIESECONOMIC VOLATILITYECONOMICS LETTERSEDUCATION LEVELEMPIRICAL EVIDENCEEMPIRICAL LITERATUREEMPIRICAL RESULTSERROR TERMEXPLANATORY VARIABLESEXPORTSEXPOSUREFACTOR ENDOWMENTSFACTOR PRICESFINANCIAL DEPTHFINANCIAL DEVELOPMENTFINANCIAL MARKETSFINANCIAL SECTORFINANCIAL SECTORSFINANCIAL SYSTEMFOREIGN COMPETITIONGDPGDP PER CAPITAGLOBAL ECONOMYGLOBALIZATIONGROWTH REGRESSIONSHEADCOUNT POVERTYHEADCOUNT RATIOHUMAN CAPITALIMPACT OF TRADEIMPORTSINCOMEINCOME DISTRIBUTIONINCOME INEQUALITYINCOMESINFLATIONINSTITUTIONAL ENVIRONMENTINTERNATIONAL COMPETITIONINTERNATIONAL ECONOMICSINTERNATIONAL TRADEINVESTMENT CLIMATELABOR MARKETLAGGED VALUESLEGAL SYSTEMLONG RUNMACROECONOMIC ENVIRONMENTMACROECONOMIC STABILITYMACROECONOMICSMEASURE OF TRADEMONETARY ECONOMICSNATURAL RESOURCESNEGATIVE EFFECTNON-TARIFF BARRIERS0 HYPOTHESISOPEN ECONOMIESOUTPUTPOLICY MEASURESPOLICY REFORMSPOLICY RESEARCHPOOR COUNTRIESPOOR PEOPLEPOOR POLICIESPOVERTY ALLEVIATIONPOVERTY GAPPOVERTY LINEPOVERTY REDUCTIONPRICE INDEXPRIMARY EDUCATIONPRIVATE SECTOR CREDITPRO-POORPROPERTY RIGHTSRAPID GROWTHREAL INCOMERESOURCE ALLOCATIONSERIAL CORRELATIONSPECIALIZATIONSTANDARD DEVIATIONSTRUCTURAL CHARACTERISTICSTARIFF BARRIERSTARIFF DATATARIFF RATESTECHNOLOGICAL CHANGETRADE AGREEMENTSTRADE DATATRADE EFFECTSTRADE LIBERALIZATIONTRADE OPENINGTRADE OPENNESSTRADE POLICIESTRADE POLICYTRADE PROTECTIONTRADE REFORMTRADE REFORMSTRADE REGIMETRADE RESTRICTIONSUNSKILLED LABORWAGE DIFFERENTIALSWAGE INEQUALITYWAGE STRUCTUREWAGESWELFARE GAINSWORLD DEVELOPMENT INDICATORSWTOWorld Bank10.1596/1813-9450-6327