Openness, Economic Reforms, and Poverty: Globalization in Developing Countries

This paper addresses a key issue in the current debate on economic development: the impact of globalization on poverty. After having discussed the problems related to the definition and measurement of both poverty and globalization, we perform a panel analysis which adds to recent literature by explicitly considering relative poverty and by conducting robustness analysis with respect to data, sources and dimensions of globalization. As far as absolute poverty is concerned, both trade openness and the “size of the government” seem to be associated with lower poverty levels. Conversely, financial openness is not linked to more poverty. With respect to relative poverty, trade openness does not affect it significantly, while weak evidence suggests that financial openness and policies aimed at reducing the size of the public intervention in the economy are linked to higher relative poverty.