7 February 2015

Capo dello ... "stato sereno"

Come più volte promesso in passato, non c'era alcuna ragione per preoccuparsi. E così è stato! In men che non si dica, il Parlamento in seduta comune ha eletto, alla quarta votazione, il dodicesimo Presidente della Repubblica. E' stata sufficiente la maggioranza assoluta, che ha, comunque, sfiorato i due terzi di preferenze. Tutto ciò è avvenuto sotto l'abile guida e la spinta del Primo Ministro, che, dapprima, ha messo in riga tutti i suoi alleati (di partito e di governo) e, poi, ha inculcato loro l'idea che il nominativo avanzato sarebbe stato il solo in grado di garantire agli Italiani di raggiungere quella serenità perduta da tempo. A giochi fatti, chi può dargli torto? "La legge del più forte è sempre la migliore", così recita un detto popolare. E finché i risultati rispettano, per filo e per segno, le previsioni, nulla può essere sottoposto a discussioni di lana caprina sul sesso degli angeli. Sulla bontà, competenza e serietà del candidato suggerito, nessuna obiezione. Inutili sono quei commenti che, in un batti e baleno, sono stati vomitati sui social forum che, a pappagallo, hanno continuano a ripetere che "Mattarella non è il mio Presidente, perché non è stato eletto dal popolo". Se è per questo, non lo erano neppure i precedenti, dal primo all'ultimo, perché la vigente Carta Costituzionale demanda l'elezione del Capo dello Stato al Parlamento in seduta comune e non ad una consultazione elettorale e, men che meno, ai social forum. Si può avere fiducia o meno in una persona, ma occorre anche saper accettare le risultanze delle regole fissate dal gioco. E questo modus operandi, che piaccia o no, è stato rispettato alla lettera. In un contesto socio/economico come quello attuale, una figura forte al Colle potrebbe essere quello che serve al Paese per evitare "strappi" di sorta alle vigenti regole democratiche. Per queste ovvie ragioni, l'aver portato un giudice della Consulta all'apice dello Stato repubblicano non può essere altro che un evidente manifestazione di garanzia. In primo luogo, come garante e sapiente interprete delle norme che gli saranno sottoposte per la promulgazione dal Parlamento. In secondo luogo, come attento vigilante sul rispetto di una legge fondamentale che può essere migliorata, ma non stravolta a seconda dei "pruriti di palazzo". La maggiore attenzione alle leggi licenziate dall'Assemblea legislativa è, quindi, assicurato. Sarebbe spiacevole, infatti, vedere la Corte Costituzionale dichiarare incostituzionale una norma promulgata da chi, prima dell'attuale carica, copriva un seggio in seno alla stessa. Sarà come sottoporre una legge ad un doppio esame di costituzionalità. Per questo, oggi, è forse il caso di dirlo agli Italiani, a voce alta e senza equivoci di sorta: "State sereni!".

AuthorEmanuele COSTA
Published byIl Nuovo Picchio n° o1/Gennaio 2015 con il titolo «Capo dello ... "stato sereno"»

30 November 2014

Doccia fredda? ... Non per beneficenza!

Alla resa dei conti, ciò che era nelle aspettative del Governo è stato praticamente disatteso. Non ci voleva un pozzo di scienza per prevedere che un aumento dei redditi familiari non avrebbe avuto alcuna ripercussione positiva sul livello dei consumi. Il sistema economico italiano è, da qualche anno, agonizzante e la paralisi è prossima se non si interviene coraggiosamente in modo serio con politiche pubbliche credibili nei fatti e non solo a parole. Il bonus IRPEF di ottanta euro non ha contribuito a generare quella che, in gergo economico, è chiamata "the big push" (ossia, "la grande spinta") per allontanarsi da quel circolo vizioso recessivo verso il quale il Paese si sta pericolosamente dirigendo. Quella gratifica in busta paga, erogata a favore dei redditi mensili inferiori ai millecinquecento euro, non è stata utile nemmeno per prendere una vigorosa rincorsa, figuriamoci, quindi, quale forza possa aver avuto la conseguente spinta! Ancora una volta, la diligenza del buon padre di famiglia ha preso il sopravvento, facendo sì che quelle risorse aggiuntive siano state accantonate in attesa di tempi migliori o come potenziale salvagente qualora la congiuntura economica volga al peggio. In altre circostanze, gli ottanta euro sono stati destinati al pagamento dei debiti contratti per i consumi effettuati in passato, considerando che, in media, circa il 40% degli italiani ha acquistato a rate. In sintesi, il benefit ricevuto non è stato utilizzato per quel target che l'Esecutivo si era prefissato. A differenza del comportamento organizzativo in auge tra i gestori della res publica, le famiglie hanno preferito utilizzare la maggiore entrata in modo alternativo rispetto ad un aumento della spesa. I contribuenti, nel loro piccolo, hanno messo mano al bilancio senza avere bisogno di alcuna consulenza per operare una spending review su scala ridotta. In tutta questa storia, però, c'è qualcosa che non torna e che potrebbe rivelarsi un ulteriore boomerang sui consumi. In altre parole, quel bonus IRPEF potrebbe essere stato erogato anche a coloro che ne avevano diritto su base mensile, ma non gli spettava su base annuale (ossia prendendo in considerazione, nel calcolo, anche la tredicesima). In questo caso, tutto si potrebbe tradurre, a fine anno, in un'amara sorpresa. Una vera e propria doccia fredda che, per effetto del conguaglio fiscale di dicembre, si rovescerà in testa a coloro che hanno beneficiato, nel corso dell'anno, degli ottanta euro pur non avendone alcun diritto. Così, chi credeva di aver scoperto l'acqua calda per far ripartire i consumi, in definitiva potrebbe aver gettato le basi per una loro ulteriore contrazione, che impatterà proprio a fine anno quando le famiglie si troveranno in tasca una minore retribuzione. Se poi il prospettato aumento dell'IVA ridotta andrà in porto, allora il bonus IRPEF potrebbe tornare al mittente anche in misura superiore a quello percepito.
AutoreEmanuele COSTA
Pubblicato suIl Nuovo Picchio n° 11-12/Novembre-Dicembre 2014 con il titolo «Doccia fredda? ... Non per beneficenza!»

1 November 2014

Trade and Poverty: an Infinite Challenge (third and last part)

Abstract
The aim of this essay is to analyse the links between openness to trade and the poverty level in developing countries. In particular, this survey takes into account liberalisation as the key role to produce two benefits: economic growth and poverty alleviation. However, market liberalisation (thanks to the invisible hand) not always pushes the economic system to way out of the vicious circle of poverty. There are evidence in which public policies led to a worst situation than the existing state before their applying. As a matter of fact, public policies depend on both the scenario in which they are implemented and on others inner mechanisms which rule the market (such as, welfare policies, monetary policies, inflation, price levels, democracy index). The main finding is that not all scholars agree that both poverty alleviation and openness to trade are related by the theme of growth. Specifically, empirical evidence is often incomplete because of deficiency in variables considered in econometric models as well as Gross Domestic Product is not an appropriate index to measure poverty. The conclusion is that the discussion on this topic is widely open and far from a final solution.

Keywords: Developing Countries, Economic Development, Economic Growth, International Trade.
JEL Classification: F43, F63, I30, O10, O40.

Table of contents
1. Introduction2. Trade and poverty: is there a way out?3. Trade and poverty: are they really connected?4. How openness to trade impacts on poverty? From the economic theories to the empirical evidence5. Conclusions6. References.


5. Conclusions
From the economic point of view it is generally true that openness to trade has a positive impact on developing countries because of comparative advantages. We also know that economic theories support this statement, whereas empirical models showed sometimes evidences in favour of theories and sometimes in contrast. So, how much are comparative advantages the keystone to push out developing countries from poverty? We saw how trade and poverty are related by the theme of growth, which may surely have a positive impact on poverty only if hand-in-hand with appropriate policies targeted to balance negative effects originated by inequalities. All of this requires, obviously, a robust and extended growth, developed within stable contexts. Assumed this assumptions as given, then the question became: is trade good for growth? Since 1990’s, when globalisation process began, several studies have been made on this topic. A large number of empirical evidences that, not always, produced results in harmony among themselves. Hence, over the time, a wide analogous literature was born in order to contradict every empirical evidences, heavily criticising both methods and techniques tested by researchers. DOLLAR and KRAY (2001) ascribed deficiency in econometric models to:
  1. measurement errors, in particular when models use variables to measure trade policies or the degree of openness to trade (e.g., trade policies do not seem to be an appropriate variable because closely linked to trade volumes);
  2. omitted variables, that is variables which are never took into account and may have a wider explanation capabilities of phenomena than those normally considered (e.g., public sector consumption, monetary policies, political stability);
  3. endogeneity, in the sense of starting to use exogenous variables (e.g., geographic position or geographic dimension that do not change over time).
For this reason STIGLITZ (2002) argued that economists, usually spend a lot of time to investigate analytically their models and always in a precisely way, but they ignore that, in the past, the most important scientific theories were verified only by either a single observation or a limited number of them. Today, most economist build empirical models, in order to justify robustly their assumptions about an economic question. Following this route, they consciously take the risks that some variables nullify the effects which they want to show. Furthermore, if a variable empirically connects trade and poverty, by growth, can we state that this variable is responsible to cause positive (or negative) impact on poverty? Sometimes these proofs can be true within a poor country and not in another one because of its peculiar features or its context. Following this idea, BHAGWATY and SRINIVASAN (1999) recognised the importance of empirical evidences, but invited economists to pay strong attention to use them as a scientific support. In conclusion, in order to evaluate if, within developing countries, international trade, besides of being the engine of growth, is contributing to relieve poverty, some econometric models should take into account growth rate of industrialized countries, which trade with least developed nations. One might discover that poverty alleviation in developing countries depends on increasing poverty in developed countries. It might be a striking result!

6. References
- George A. AKERLOF, “The Market for "Lemons": Quality Uncertainty and the Market Mechanism”, The Quarterly Journal of Economics, Vol. 84, n° 3, August 1970;
- Jagdish BHAGWATY and Thirukodikaval N. SRINIVASAN, “Outward-Orientation and Development. Are Revisionists Right?”, Economic Growth Center Yale University, Discussion Paper n° 806, September 1999; 
- Michael BRUNO, “Does Inflation Really Lower Growth?”, Finance & Development, September 1995; 
- Anis CHOWDHURY and Girijasankar MALLIK, “Inflation and Economic Growth: Evidence From Four South Asian Countries”, Asia-Pacific Development Journal, Vol. 8, n° 1, June 2001; 
- David DOLLAR and Aart KRAAY, Trade, Growth, and Poverty, Development Research Group, The World Bank, June 2001; 
- Robert C. FEENSTRA and Gordon H. HANSON, Foreign Investment, Outsourcing and Relative Wages”, National Bureau of Economical Research, Working Paper n° 5121, May 1995; 
- Jean-Paul FITOUSSI, Amartya SEN and Joseph E. STIGLITZ, “Mismeasuring Our Life: Why GDP doesn’t Add Up”, New Press, 2010; 
- Oussama KANAAN, “Tanzania’s Experience with Trade Liberalization”, Finance & Development, Vol. 37, n° 2, June 2000; 
- Anne O. KRUEGER, Trade and Employment in Developing Countries, University of Chicago Press, Vol. 3, 1983; 
- Ross LEVINE and David RENELT, “A Sensitivity Analysis of Cross-Country Growth Regression”, American Economic Review, September 1992; 
- Neil McCULLOCH, Andrew McKAY and Alan L. WINTERS, Trade Liberalizations and Poverty: The Evidence so Far, Journal of Economic Literature, Vol. 42, March 2004; 
- Robert POLLIN and Andong ZHU, “Inflation and Economic Growth: A Cross-Country Non-linear Analysis”, Political Economy Research Institute/University of Massachusetts-Amherst, Working Paper Series n° 109, October 2005.

AuthorEmanuele COSTA
Published byWorking Paper

28 October 2014

Quale strategia per stimolare la crescita?

Dal mese di luglio l'Italia ha assunto la Presidenza del Consiglio dell'Unione Europea. Lo ha fatto in maniera dirompente, al di fuori dei soliti schemi burocratico/formali che hanno sempre caratterizzato la classe politica del Bel Paese. L'obiettivo è più che ambizioso: uscire da quella noia in cui, nell'ultimo decennio e grazie alle sue direttive, è sprofondato il senso di appartenenza all'Unione Europea, contribuendo a far germogliare sentimenti antieuropeisti. D'altronde, se in tutti questi anni non si sono registrati miglioramenti nel benessere sociale dei Cittadini (complice anche la crisi economico/finanziaria) significa, senza mezzi termini, che qualcosa, se non tutto, è sicuramente da rivedere, riformulare o radicalmente modificare. L'ordine è uno solo: occorre adottare politiche idonee a stimolare la crescita economica, per non rimanere invischiati nel vortice della recessione. Non è, però, sufficiente provvedervi per decreto. Occorre agire sui comportamenti organizzativi degli operatori economici affinché possano esserne facilitati nell'assunzione delle decisioni di investimento e non abbandonati al loro destino. La perdita di fiducia del settore produttivo potrebbe inficiare i buoni propositi dei provvedimenti in suo favore. Crescita, tuttavia, non è sinonimo di indebitamento. In altre parole, la ripresa economica non può essere sponsorizzata dal debito pubblico. Su questo argomento, gli ortodossi del rigore finanziario sono inamovibili. E' pur vero che, ai tassi di interesse attuali (prossimi allo zero) può essere conveniente ricorrere ai debiti, ma corrisponde ad altrettanta verità che alla ripresa economica generalmente fa seguito una crescita del costo del denaro, con il rischio certo di ritrovarsi con uno stock di debito più elevato, sul quale graverà complessivamente un onere finanziario superiore. Eppure, un'altra strada si può aprire all'orizzonte per finanziare la crescita. Il fronte di azione è sempre lo stesso: il debito pubblico. Anziché aumentarlo, la ripresa economica può essere trainata dalla rimessa in circolo di risorse derivanti dal progressivo rimborso dello stock di debito sovrano affinché possano trovare un impiego alternativo nel settore privato che è sicuramente più produttivo di quello pubblico. Questo, però, imporrebbe una linea di condotta che rimetta in discussione tutto l'impianto organizzativo del Settore statale, in modo da trasformarlo nel motore propulsivo dello sviluppo economico, liberandosi da quella zavorra che per decenni ha rappresentato la "palla al piede" ad ogni libera iniziativa volta a migliorare la produttività del sistema economico nazionale. In alternativa, ci si potrebbe ritrovare tra sei mesi a discutere delle stesse cose, ma in un contesto ancor più depresso di quello odierno, dove sarà necessario adottare misure drastiche per riportare lo stato dei fatti al livello attuale, non ad uno migliore.
AutoreEmanuele COSTA
Pubblicato suIl Nuovo Picchio n° 09-10/Settembre-Ottobre 2014 con il titolo «Quale strategia per stimolare la crescita?»

1 October 2014

Trade and Poverty: an Infinite Challenge (second part)

Abstract
The aim of this essay is to analyse the links between openness to trade and the poverty level in developing countries. In particular, this survey takes into account liberalisation as the key role to produce two benefits: economic growth and poverty alleviation. However, market liberalisation (thanks to the invisible hand) not always pushes the economic system to way out of the vicious circle of poverty. There are evidence in which public policies led to a worst situation than the existing state before their applying. As a matter of fact, public policies depend on both the scenario in which they are implemented and on others inner mechanisms which rule the market (such as, welfare policies, monetary policies, inflation, price levels, democracy index). The main finding is that not all scholars agree that both poverty alleviation and openness to trade are related by the theme of growth. Specifically, empirical evidence is often incomplete because of deficiency in variables considered in econometric models as well as Gross Domestic Product is not an appropriate index to measure poverty. The conclusion is that the discussion on this topic is widely open and far from a final solution.

Keywords: Developing Countries, Economic Development, Economic Growth, International Trade.
JEL Classification: F43, F63, I30, O10, O40.

Table of contents
1. Introduction2. Trade and poverty: is there a way out?3. Trade and poverty: are they really connected?4. How openness to trade impacts on poverty? From the economic theories to the empirical evidence5. Conclusions6. References.

4. How openness to trade impacts on poverty? From the economic theories to the empirical evidence
According to economic theories, when a country decides to way out from a self-sufficient regime, by opening up to international trade, generally improves its welfare. Empirical studies (DOLLAR and KRAAY, 2001) showed that no autarkic government performed high rates of growth. For instance, KANAAN (2000), reporting evidences from Tanzania's experience, proved that when this country decided to pass from an open economy to an autarkic regime it reduced its trade by 50%, collecting a series of negative performances (lack of raw materials, collapse in imports and exports, fall in fiscal revenue) and a significant decline in welfare (high levels of inflation, lack of goods and services, unemployment). Furthermore, DOLLAR and KRAAY (2001) explained that if a developing country is more open to trade, it may manage a faster growth. For instance, China and India grew a lot after their openness to international trade, contributing to relieve significantly their poverty level, thanks also to income redistribution generated by the growth. In contrast, those developing countries which did not take part in globalisation fell down their GDP, worsening poverty rate. Today, most economists agree with the theoretical argumentations and, over the years, they have attempted to confirm the connections between openness to trade and poverty alleviation by several empirical results. However, it also exists a wide literature which not always provided a convincing “scientific support to the assumptions made by economic theories. Multiple studies confirmed the hypothesis that trade liberalisation and poverty reduction are not directly linked, but an important tool of connection between the two phenomena is represented by economic growth. In fact, trade liberalization helps growth and, in turns, growth leads to poverty reduction. So, how may we justify this statement? To bypass the existing difficulties about measurement of the aforementioned phenomena, WINTERS et al. (2004) investigated the channels that can affect the phenomena, attempting to find one or more links between trade liberalization and poverty reduction in developing countries, in order to allow governments to focus on policies targeted to improve welfare. As we saw in the previous paragraph, the authors identified four channels by which trade and poverty may be connected (1). Firstly, from the macroeconomic point of view, different opinions agree that international trade may contribute to growth. But, can the latter set upon the poverty, alleviating it? This matter is still an open question. WINTERS et al. (2004) sought to investigate how to relate the former with poverty alleviation, by analysing macroeconomic aspects tied to economic growth and then how to put them in practice, by trade or other kinds of policies, to reduce poverty. Specifically, by openness to trade, consequences involve, generally, investments, productivity, production, income and consumption in addition to imports and exports. The authors stated that trade-growth connection is a closely empiric question, listing a wide literature to support this thought. I disagree with this opinion because not always “scientific” evidence may clearly explain the reality, which depends on multiple variables (endogenous and exogenous) and the effects on developing countries may be different, and depending, for instance, on their geographical positions, government regimes, infrastructures and communication systems. Moreover, are we really sure that growth can alleviate poverty or have the authors intentionally considered evidence in favour of their aim? Often, the value of GDP is used as the sole index to evaluate the size of economic growth. So, when GDP increases then GDP per capita may increase as well. But, how much this increase may affect poverty alleviation? In addition, can we support the idea that increase in GDP per capita means that people, and especially poor, have an higher income than before? The matter is widely controversial. Indeed, an higher GPD means that one country is richer than before, but does not correspond to the extent that each person who lives in that country has a better income. That is not true for different reason. By way of non-exhaustive example:
  1. openness to trade may have both positive and negative effects on poor. Obviously, it depends on poor and on their capabilities to exploit new opportunities offered by international trade. And, though it is generally true that trade liberalization improve welfare, every change produces winners and losers;
  2. fiscal policies and, as a rule, all social policies may have a huge impact on income redistribution. So if the extra income produced by trade is equally redistributed, one may confirm that openness to trade relieves poverty. If not, one cannot state it, because if GDP per capita rises do not means uniquely that poor have a better income.
DOLLAR and KRAAY (2001) found that not all developing countries who opened up their markets to international trade enhanced the income of poor. In a first group of them (China, India, Malaysia, Thailand and Vietnam) both GDP per capita and income of poor rose, whereas in another one (Brazil, Mexico and the Ivory Coast) the former increased, while the latter declined. But, even in this case, the results were not so robust because, for instance, for the first group, the reasons might consist in the similar geographical area and so in their abilities of exploiting the proximity cooperation, easing, in turns, their integration in the world economy. The authors discovered that the differences in the income of poor between these two groups were due to the magnitude of growth. Hence, they concluded that a strong growth may cause a reducing poverty, while a weaker growth might produce the opposite effect. So, it is not so clear how international trade may affect the intensity of growth. To measure the degree of openness to trade, the authors compared two countries in the same geographical area and they found that it may depend on several factors such as fiscal policies, stabilisation, property rights and exchange ratesSecondly, the scholars considered households and markets. The former is an important keystone, especially in the developing world, from both the economic and social point of views. Indeed, poverty alleviation means essentially reducing poverty state of persons. And persons, single or in group, set up families. The latter is important as well, because markets mean new opportunities and, therefore, employment and salaries for workers. And this may improve welfare. Both households and markets are closely connected by price levels. As openness to trade may influence price variability, it may have, in turns, a negative impact either on markets (e.g., destroying it due to competition) or households (e.g., reducing their real wealth). Price levels is also a macroeconomic issue because linked to interest rates, which may affect investment, production and growth. POLLIN and ZHU (2005) showed that a low inflation rate is a policy as an end in itself, because policy makers are more interested in promoting growth and employment. The survey argued that there are no proofs that an high inflation do not support economic growth. Even within low income countries high growth levels can be compatible with a high inflation, especially if price fluctuation depends on “investment demand pressures in an expanding economy (BRUNO, 1995). Hence, if prices fluctuate there might be a double final effect for poor:
  1. on one hand, by price changes, which impact on real income;
  2. on the other hand, by growth rates, which may affect earned income.
By the way, that is a huge problem for the stability of a country and not only for poor, even if inflation rate tends to impinge more on poor than rich. As a matter of fact, stability is one of the most important target to reach during economic growth to prevent that price fluctuation nullify all benefits produced by an improvement in the income of poor. If not, instability takes the risk to create more “victims among poor, mainly in the short run, when shocks due to growth create winners and losers among population. Empirical evidences (DOLLAR and KRAAY, 2001) observed that one of the positive effect by integration process of domestic economy in the world trade consists in declining the average inflation rate, while other authors (CHOWDHURY and MALLIK, 2001), examining four South Asian countries (Bangladesh, India, Pakistan and Sri Lanka), proved that there is a positive relationship between inflation and growth. Hence, why stability is so important for growth? Economic growth, in an extreme meaning, may be considered as a shock for the economy within developing countries, and therefore a factor of instability. Indeed, when one refers to a shock, the literature tends to associate it with a negative event. But economic growth is not a negative occurrence. Growth need to be combined by appropriate policies, otherwise it may be cause adverse effects. In other words, by way of non-exhaustive example, it may be promoting by:
  1. reducing inflation rate, in order to avoid of impinging on poor;
  2. social policies, in order to support poor who did not exploit the new opportunities due to economic development (e.g., unemployment insurance);
  3. exchange rate stability, in order to allow positive investment flows;
  4. political stability, in order to attract investment, both internally and from outside.
Thirdly, the academics took into account wages and employment. One might criticise this terminological setting, because it should be better talking about employment and then wages and not vice versa. Indeed, to evaluate the impact on poverty by trade, income seems to be is one of the most important variable used to determine poverty level. But it is not so. In a open-to-trade country, wages are not assessed internally, but they are an exogenous variable calculated outside the domestic borders. So, it will be the next adjustment process which will determine employment level. So, if the matter is pushing developing countries out of poverty, a simple finding might be fixing wage levels over the poverty line, but this solution does not mean that welfare improves. In addition, in developing countries the issue seems to concern only unskilled workers. So if policies want to relieve poverty, it might be sufficient increasing wage levels for unskilled labour force. According to both HECKSCHER-OHLIN’s theory and STOPLER-SAMUELSON’s theorem, trade liberalization should help poor countries to reduce poverty due to comparative advantages, by exporting labour intensive goods. This because least developing countries have an abundant endowment of unskilled workers and their economic systems are mainly agricultural. So, if the price of labour-intensive goods increases, both the production and real wage will rise as well. These economic theories are important because some scholars (KRUEGER, 1983) considered the matter of poverty strictly connected with the real wages of unskilled workers. In contrast, other authors (FEENSTRA and HANSON, 1995) argued that also the real wages of skilled workers rose relatively to those of unskilled ones. But in this case, the most interesting finding is not the increase in relative real wages for skilled workers, but that also the real wages for unskilled workers rose. Last but not least, the scholars examined trade liberalisation from the “political” point of view. In other words, they studied the effects on public revenues and expenditures by openness to trade and their impact on poverty. Generally speaking, the main result seems to consist in reducing revenues, but neither theories nor evidences supported this idea. Reducing in tariffs may affect negatively poverty because of revenues decline. But, in contrast, trade liberalization increases the size of the pie and by extending the tax base it may have a positive effect on public resources (with different taxes from tariffs, such as Value Added Tax) and, consequently, on poverty. The latter effect is only political, because it depends on government policies and, especially, on those targeted to support the income of poor (e.g., complementary policies to aid poor that are affected negatively by openness to trade).

Footnotes
(5) In a previous paper, WINTERS (2000) identified six trade-poverty links: 1) price changes; 2) factor markets; 3) changes in government revenue and expenditure; 4) changes in risk and vulnerability; 5) effects on economic growth; 6) adjustment strains.


(to be continued)

Author: Emanuele COSTA
Published by: Working Paper