ABSTRACT
This chapter focuses on the links between trade and growth because changes in average per capita income are the main determinant of changes in poverty. Trade policy is only one of many determinants of growth and poverty reduction. The chapter considers the effects of openness on poverty in two components: the effect of openness on average income growth and the effect on distribution for a given growth rate. Trade openness has important positive spillovers on other aspects of reform, however, so that the correlation of trade with other pro-reform policies speaks to the advantages of making openness a primary part of the reform package. The various measures of trade liberalization and openness that have been used include measures of policy such as tariff rates and nontariff barrier coverage, on the one hand, and outcome measures such as trade volumes, on the other.
