Global Trade and Poor Nations

Global Trade and Poor Nations: The Poverty Impacts and Policy Implications of Liberalization

BERNARD M. HOEKMAN
MARCELO OLARREAGA
Copyright Date: 2007
Pages: 254
https://www.jstor.org/stable/10.7864/j.ctt1281dk
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  • Book Info
    Global Trade and Poor Nations
    Book Description:

    This thoughtful volume assesses the likely impact of reformed trade policies on the poorest of the poor -those on the bottom economic rungs in developing nations. The focus on a spectrum of poor nations across different regions provides some helpful and hopeful guidelines regarding the likely impacts of a global trade reform, agreed upon under the auspices of the World Trade Organization, as well as the impact of such reforms on economic development. In order to facilitate lesson-drawing across different regions, each country study utilizes a similar methodology. They combine information on trade policy at the product level with income and consumption data at the household level, thus capturing effects both on the macro level and in individual households where development policies ideally should improve day-to-day life. This uniformity of research approach across the country studies allows for a deeper and more robust comparison of results.

    eISBN: 978-0-8157-3672-1
    Subjects: Business, Sociology

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Foreword
    (pp. vii-viii)
    Patrick Messerlin and Ernesto Zedillo

    This book grew from what was originally conceived as a much smaller project to supplement the work of the United Nations Millennium Project Task Force on Trade, for which we had the pleasure to serve as co-coordinators. In its initial form, four research papers were commissioned to assess the impact of potential trade reforms on poverty reduction in specific low-income countries: Cambodia, Ethiopia, Madagascar, and Zambia. What were the potential economic gains these countries might experience from improved access to global markets and their own trade reforms required by the Doha Round? And what would be the impact of both...

  4. Introduction
    (pp. 1-8)
    ERNESTO ZEDILLO

    The biggest problem confronting the World Trade Organization (WTO) at the time of writing this—end 2006—is surviving the Doha Round. The Doha Round negotiating process generated some positive developments for the trading system, one of which is the focus of this book: a better understanding of the linkages between trade and poverty and the need for complementary measures to assist the poorest countries to benefit from global trade opportunities, including “aid for trade.” But this positive aspect of the process is greatly outweighed by the negatives. It is still not known whether the Doha Round will eventually be...

  5. PART ONE The Doha Agenda
    • 1 The Challenges to Reducing Poverty through Trade Reform: Overview
      (pp. 11-30)
      BERNARD HOEKMAN and MARCELO OLARREAGA

      In 2001 in Doha, Qatar, members of the World Trade Organization (WTO) agreed to launch the Doha Development Agenda, a round of multilateral negotiations to reduce the use of trade-distorting policies and to bolster the development relevance of the WTO.¹ The Doha agenda spans numerous issues, including reducing agricultural support policies, liberalizing market access for goods and services, and strengthening WTO rules and dispute settlement procedures. As has been stressed in virtually all of the research on the potential impacts of broadly based global trade reform, the potential benefits for the world economy are significant. Global trade reforms can also...

    • 2 Estimating the Effects of Global Trade Reform
      (pp. 31-50)
      HIAU LOOI KEE, ALESSANDRO NICITA and MARCELO OLARREAGA

      The Doha Round has been termed the Doha Development Agenda. Much has been written by researchers and policy advocates on what would constitute a good outcome from a development perspective. Most would agree that deep trade liberalization would be beneficial for the world as a whole—and, in particular, for consumers and taxpayers in Organization for Economic Cooperation and Development (OECD) countries and for exporters in large emerging market countries with a clear comparative advantage in labor-intensive manufactures and agricultural products. There is much less agreement that deep global trade reforms would benefit the poorest countries. Indeed, many would argue...

  6. PART TWO Country Studies
    • 3 Ethiopia
      (pp. 53-76)
      ALESSANDRO NICITA

      This chapter analyzes how the changes in international prices consequent on the implementation of the Doha Development Agenda would affect household expenditures and incomes in Ethiopia. To explore the variance in the distribution of the effects and to identify potential winners and losers, the effect of multilateral trade liberalization is estimated by broad household groups and by geographic region. Two scenarios are considered: limited multilateral trade liberalization, termed the business-as-usual scenario, and more extensive multilateral trade liberalization, termed the ambitious scenario.¹ The chapter also explores complementary policies that Ethiopia might adopt to help its households take advantage of the opportunities...

    • 4 Madagascar
      (pp. 77-96)
      ALESSANDRO NICITA

      As shown in chapter 2 of this volume, the overall impact of multilateral trade liberalization is expected to be minor in Madagascar, as in most other least developed countries. However, a small overall effect might still mean a large impact for some parts of the population. This chapter analyzes the effects that multilateral trade liberalization would have across income groups and between urban and rural areas, identifying possible winners and losers. The analysis explores the effects on households’ real income of the two scenarios introduced in chapter 2: a business-as-usual scenario, which involves a 40 percent reduction in bound tariffs,...

    • 5 Zambia
      (pp. 97-118)
      JORGE F. BALAT, IRENE BRAMBILLA and GUIDO G. PORTO

      The trade reforms that are on the so-called Doha Development Agenda would introduce new opportunities and new challenges for poor households in developing countries. These opportunities and challenges are multidimensional: as consumers, households will face changes in the prices of goods they buy, and as income earners, they will face changes in wages, employment, the profitability of different crops, and agricultural income.

      Our analysis of these impacts on poverty in Zambia builds on two links, one connecting trade reforms with prices and quantities and another connecting household income and consumption patterns with those price and quantity changes. The estimated changes...

    • 6 Cambodia
      (pp. 119-144)
      ISIDRO SOLOAGA

      Changes in trade policies can create opportunities as well as risks for the poor.¹ This chapter assesses the likely impact of the implementation of the Doha Development Agenda on household income and expenditures in Cambodia. And, since rice plays a large role in both production and consumption for Cambodia’s poor, the chapter also assesses the ability of potential domestic reforms to improve the production, processing, and trading of rice. The results shed light on priorities for poverty reduction by suggesting how different income groups of households would be affected by different reforms and what they would gain or lose in...

    • 7 Vietnam
      (pp. 145-173)
      AYLIN IŞIK-DIKMELIK

      Vietnam took big unilateral steps in trade liberalization during the last decade and is now one of the most open economies in Southeast Asia. It continues to emphasize trade reforms, as evidenced by the negotiations for its accession to the World Trade Organization, the ratification of the Bilateral Trade Agreement with the United States, and the new round of talks under the Doha Development Agenda (DDA).

      The debate surrounding the Doha talks is that trade reforms will not be effective in reducing poverty in developing countries. It is clear that multilateral trade reforms will have differing effects on individual countries...

    • 8 Bolivia
      (pp. 174-198)
      GABRIEL LARA and ISIDRO SOLOAGA

      Bolivia is one of the poorest countries in Latin America and suffers from widespread income inequality and unemployment. This chapter evaluates how Bolivia’s households would be affected by multilateral trade reforms arising from the Doha Round. Besides the probable impacts on commodity prices and quantities, including export quantities, these reforms are likely to augment the demand for labor. Thus we evaluate the income that subsistence producers would gain by switching into wage employment in agriculture and the income that urban households would gain from an expansion of labor demand in the manufacturing sector.

      We adopt the expected changes in international...

    • 9 Nicaragua
      (pp. 199-222)
      ANIA I. GÓMEZ and ISIDRO SOLOAGA

      This chapter assesses the expected impact of a successful implementation of the Doha Development Agenda on households in Nicaragua, differentiating between urban and rural areas and presenting results by deciles of household per capita expenditure to identify effects on the distribution of income. We also investigate the implications for poverty of some potential domestic policy changes, to help in showing other avenues for improving welfare in Nicaragua.

      The empirical approach follows that of Winters, in which changes in international prices and quantities are mapped onto household data.¹ Key elements are the changes in international prices, imports, and exports that are...

  7. PART THREE Policy Implications
    • 10 Development and Trade Agreements: Beyond Market Access
      (pp. 225-246)
      BERNARD HOEKMAN

      The foregoing chapters have assessed the impact of global trade liberalization on world prices and the consequences of relative price changes for outcomes at the household level, especially for the poor in the poorest countries. This type of analysis complements the much larger literature focusing on the overall welfare effects of global reforms at the country and cross-country levels. The main conclusions emerging from the micro, within-country analyses are that deep reforms in trade policy would yield much greater benefits for poor households than would a more limited approach to trade liberalization and that complementary actions could greatly increase the...

  8. Contributors
    (pp. 247-248)
  9. Index
    (pp. 249-254)