Using data from 114 countries (1983–2007), we examine the relationship between globalization and World Bank absolute poverty estimates. We ﬁnd a signiﬁcant negative correlation between globalization and poverty, robust to several econometric speciﬁcations, including a ﬁxed-eﬀect panel—a “long run” ﬁrst diﬀerence—and a pooled OLS-regression. Introducing two instruments for globalization we also show that results are robust to correction for potential endogeneity. We motivate and test the instruments in several ways. In particular information ﬂows and more liberal trade restrictions robustly correlate with lower absolute poverty.
Is Globalization Reducing Absolute Poverty?
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