Trade Openness and Poverty: Evidence from a Panel of Developing Countries

Abstract

Trade openness supposes a key component of the strategy for growth. The study consists of 45 developing nations of Asia and Africa. And data ranges from 1995-2020, collected from The World Bank. Theoretically the impact of trade openness on poverty and income inequality is ambiguous. GMM methodology uses to an estimate the result. Findings explore that trade has no direct effect on poverty but inequality associated with trade openness. Economic growth found pro-poor which favors the poor on one side and on trade openness on other side. To get the positive effect of trade on poverty and inequality it does not matter that trade is more open or less open. The fruit depends on the policies regarding trade. Financial development support trade openness along with taxes.