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  Is Trade Liberalization really all that Good for Growth,
Let Alone Reducing Inequality and Poverty?
 
 
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There is a little agreement on the relationship between trade liberalization and poverty with many economists presuming that trade liberalization contributes to both growth as well as inequality reduction, although there is little incontrovertible evidence supporting this.
This article contains author’s observations on Seminar Series C on Trade & Poverty, Closing Ceremony, Asian Development Forum, Seoul, 5 November 2002. Most of this discussion is centered on trade and growth, and only indirectly on inequality and on poverty.

(There was an argument that poverty has fallen considerably in the last decade due to growth (courtesy liberalization) (Bhalla). Anderson advocated agricultural trade liberalization, which Yamazawa noted, will primarily benefit the rich countries. Anderson also showed greater terms of trade (ToT) losses due to trade liberalization for most tropical developing countries.)The depreciation of the terms of trade (TOT) for primary products against manufactures puts a greater significance on the international inequalities compared to intra-national inequalities in apparently growing world inequality.

Meanwhile Kharas insists that trade liberalization is good for growth and for poverty reduction and side by side stressed on the need to focus on the vulnerable. On the other hand, Quibria noted that short-term impacts of trade liberalization may be very bad, even if ameliorated in the medium or long term.)

There is growing concern that trade liberalization under WTO has been more onerous than under GATT, especially for the least developed countries which are obliged to implement liberalization programs determined by powerful governments for influential transnational corporate interests.

With the recent global slowdown in economic growth, export markets have shrunk, reducing the viability of export-led growth. Hence, developing countries are being urged to develop social safety nets requiring fiscal and targeting capacities already eroded by ongoing liberalization. The author asserts that with the erosion of earlier productive capacities by trade liberalization, renewed reliance on domestic-led growth has not been easily achieved as many trade policy instruments are no longer available.
 
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Most of this is available on request from me.
 
     
     
 
 
 
 
 
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