Trade and Poverty in the Developing World

Abstract

Globalization brings progress to a nation as well as rapid economic growth. It also helps increase gross domestic product and, most importantly, makes part of the population more prosperous by increasing living standards and allowing the country to be self-sustainable. In this study, data from 84 countries were collected from the World Trade Organization; using Ordinary Least Squares, this data was analyzed to help determine the effects trade has on absolute and relative poverty as well as inequality. Findings showed that trade does help reduce absolute poverty but at a very slow and diminishing rate. In addition, trade creates a small but statistically insignificant reduction in inequality. The results also showed that greater population growth results in more poverty.