Document Type

Conference Paper

Publication Date

4-15-1996

Conference Location

Geneva

Conference Dates

15-17 April 1996

First Page

1

Last Page

7

Keywords

Poverty, Economic Relations, International Relations

Abstract / Description

Let me begin by expressing my agreement with Mr. Woodward that in the countries globalization/liberalization, which stand to gain from there should be significant benefits in terms of additional empl.oyment; through increased trade opportunities and FDI. I also agree that the translation of these effects on welfare of the poor will depend very much on a number of factors, most important being the income changes in the agriculture sector and urban informal sector where most of the poor reside and the allocation pattern of public expenditures . There may also be time lags as the poor may suffer, in the short-term, transitional costs due to dislocations caused by liberalization in output and factor markets. The two interesting questions that should guide our discussion this morning then are: (i) what will be the direction and magnitude of the aggregate effect of globalization and liberalization on the welfare of developing countries? To answer this question, the individual or household welfare should be the appropriate measure and this implies weighting by population rather than by the number of developing countries. (ii) How are these aggregate gains translated into net benefits for the poorer segments of the population in the gaining countries so that incidence of poverty is reduced? I would like to stress that the channels for reducing poverty should not be confused with those for lowering income inequalities. The objective is to improve the living standards of those living below the poverty line. I would therefore divide my remarks in two parts. In the first part, I would like to analyze the evidence on the aggregate effects of globalization and liberalization on developing countries. In the second part, I would like to present the transmission channels through which the aggregate gains can be translated into net benefits for the poor.

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