Distributional effects of globalization
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Γαβριελάτου, Ιωάννα
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Abstract
The relationship between trade, growth and poverty is a controversial issue. Many
economists argue that trade liberalization yields to positive economic effects. Instead, the validity of this view is more complex. In this dissertation we use poverty
and trade data to estimate the distributional effects of globalization. We employ
a dataset that includes the proportion of people that live on less than $1.9 a
day, exports of agriculture, manufacturing and commodities sectors and GDP per
capita growth. We conduct Pooled OLS and fixed effects estimations with time
dummies. Given that the OLS estimates may provide biased estimations, due to
the existence of country-specific effects, we further conduct Generalized Method of
Moments estimations (GMM). Ultimately, poverty in the non low-income countries
is expected to decrease in response to marginal changes in agricultural exports. Instead, we anticipate poverty responses to be positive in the low-income countries.
Still, we find that the long-run responses are higher than the short-run responses
and poverty rate in LIC is extremely sensitive to changes in agricultural exports,
since the response exceeds unit. Marginal increases in manufactures exports yield
to poverty reduction effects for the whole panel. We further infer that the response
of poverty rate in LIC on marginal increases in commodities exports is positive.
Instead, poverty rate is positively associated with GDP per capita growth in both
short and long run.
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Keywords
Agricultural exports, Economic growth, Income inequalities, Low income countries, Manufactures exports, Ores and Metals exports, Poverty