When Does Globalization Help the Poor?

Abstract

What is the relationship between globalization and poverty? Developing economies have long turned to international trade and finance as a solution for development, yet 35% of the world's population still lives below the international poverty line. Economists and political scientists explore this relationship but are far from reaching a conclusion. We review this literature and argue that to understand the relationship between globalization and poverty, we must ultimately understand the political motivations underlying the policies directed at the poorest. Specifically, we contend that scholars need to identify the ideological positions of developing country governments, an identification that moves beyond the conventional left-right divide that prevails in developed nations. We provide theoretical guidance on how scholars might begin to operationalize ideology on a global basis and why this is necessary to evaluate the globalization-poverty linkage. Further, we provide some preliminary quantitative and qualitative tests of our argument. Ultimately, scholars from both disciplines must begin to evaluate government commitment to pro-poor redistribution (rather than the extent to which policy is beholden to vested elite interest groups) in order to assess the relationship between trade and poverty.