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The Journal of Economic Inequality

, Volume 5, Issue 1, pp 123–134 | Cite as

On the links between globalization and poverty

  • Ann Harrison
  • Margaret McMillan
Article

Abstract

This article surveys the evidence on the linkages between globalization and poverty, drawing on a new NBER study that has been completed under the direction of one of the authors. We focus on two measures of globalization: trade and international capital flows. Past researchers have argued that global economic integration should help the poor since poor countries have a comparative advantage in producing goods that use unskilled labor. Our first conclusion is that such a simple interpretation of general equilibrium trade models is misleading. Second, the evidence suggests that the poor are more likely to share in the gains from globalization when there are complementary policies in place.Third, trade and foreign investment reforms have produced benefits for the poor in exporting sectors and sectors that receive foreign investment. Fourth, financial crises are very costly to the poor. Finally, the collected evidence suggests that globalization produces both winners and losers among the poor. The fact that some poor individuals are made worse off by trade or financial integration underscores the need for carefully targeted safety nets. We conclude the article by identifying a number of unanswered research questions regarding the impact of globalization on poverty.

Key words

globalization poverty financial integration trade reform foreign investment 

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Copyright information

© Springer Science+Business Media, Inc. 2006

Authors and Affiliations

  1. 1.University of California at BerkeleyBerkeleyUSA
  2. 2.Tufts UniversityMedfordUSA
  3. 3.NBERCambridgeUSA

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