Trade Liberalization and Poverty in Developing Countries: Literature Survey

The impact of trade liberalization on poverty and income distribution has gained attention for policy makers and researchers more than three decades. The empirical result of the impact of trade liberalization on poverty and income distribution is mixed. It was highly depended on characteristics of countries in term of economic and trade structure, application of methodologies, using variables and characteristics of trade liberalization. Therefore, the objective of this paper is to attempt to conduct literature reviews on the impact of trade liberalization on poverty and income inequality in developing countries. Methodology: As there are several methodologies for assessment of trade liberalization, but we focus on CGE model and micro-simulation because these two methodologies were widely used for trade analysis in developed and developing countries. Findings: The relationship between trade liberalization and poverty is ambegious. Recommendations: This literature survey is not only important for researchers but it is important for policy makers in Laos in order to implement trade policy.