Resource information
The Global Poverty Report considers
the effects of globalizing markets on poverty in developing
countries. It outlines the channels through which increased
trade openness can affect poverty and examines the evidence
from four regions: Sub-Saharan Africa, Asia and the Pacific,
Eastern Europe and Central Asia, and Latin America and the
Caribbean. Written at the request of the G8, the report is
the result of a joint effort of the regional development
banks, the World Bank, and the International Monetary Fund.
Increased openness can affect an economy in various ways,
creating opportunities for the poor as well as risks. First,
it can affect the prices of goods and services that the poor
consume and produce, benefiting those who are net consumers
of goods that become cheaper and those who can obtain higher
prices for their products on international markets. Second,
it can affect the demand for and returns to factors of
production that the poor have to offer, such as labor.
Third, it can affect government revenue and the resources
available for antipoverty programs. Fourth, it can influence
the potential for economic growth, which in turn affects
poverty. Fifth, the short-term costs of transition, as well
as the possible increased volatility of growth stemming from
the opening up of markets, may increase the need for social
protection mechanisms. Comprehensive trade reform can help
reduce poverty when it is part of a set of reforms that
improve the domestic macroeconomic and investment climate,
enhance infrastructure and technology, and contribute to the
provision of knowledge and skills. However, these effects
vary significantly across countries, regions, and groups
within countries, which makes it difficult to generalize
about the effects of trade liberalization on poverty.
