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D 5.1 Report on trade globalisation and poverty

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According to the original NOPOOR proposal for Task 5.1, the nature, quality and extent of globalisation is an old issue that needs revisiting in the light of recent developments with the changing trends in commodity prices and the performances of countries specialised in processed industrial goods.

The recent international financial and food crises have raised serious questions about the role of specialisation in poverty and, for some countries, a “re-specialization” in primary products. NOPOOR will develop comparative and quantitative analysis of the impact of specialisation schemes, considering their contribution to poverty … A macro-economic study on many African countries shows that the impact of trade openness, and in particular of trade agreement, on the living standards of the population and on poverty may vary substantially according to the specific context where it occurs. The second study shows that, in the case of Brazil, international trade does not imply poverty reduction when it occurs mainly in sectors with low skill labour.

These findings contribute to shape a new view on the relationship between trade liberalisation and poverty reduction. It cannot be said that globalisation is always beneficial to the poor and one have to consider specific contexts. Moreover, the hypothesis of re-specialisation of countries in primary products is verified, here in the case of Brazil.  

These findings have important policy implications for developed countries as well as developing or emerging countries. For the first, it shows that preferential agreements may have adverse effects and not reach their goals of taking people out of poverty[2]. For the latter, it shows that the benefits of trade openness will occur only if accompanying industrial, labour or social policies are implemented.

This deliverable gives an overview of the two researches conducted in the task 5.1. Full results can be seen in the articles referenced in annex, which can be downloaded from the NOPOOR website. Other articles are still in progress.

[1] Excerpts in italics are drawn from the Annex 1, Description of Work of the Grant Agreement.

[2]  The first results of another study in progress (5.4 CRES: impact of trade liberalization between the EU and the ECOWAS countries on growth and poverty) show similar findings in the case of EPA (Economic Partnership Agreement between the EU and West African countries).