Relative effects of trade liberalization on poverty: Evidence from Thailand

Abstract

Trade liberalization has long been expected to contribute to poverty reduction. The economy of Thailand provides an excellent case to study this relationship because its economy has structurally transformed in the past few decades through the export-oriented growth strategies. The purpose of this article is to examine the relative effect of Thailand’s accession to the World Trade Organization (WTO) in 1995 on poverty reduction, using a unique data set compiled from labour force survey and tariff data. Variation in production composition across provinces allows us to examine a relative impact of such trade reform. Using the instrument variable estimation, we found that provinces in which employers are concentrated in industries exposed to a greater tariff reduction experience more rapid poverty reduction and more income growth than less exposed provinces. This impact on poverty and income is also more pronounced in urban areas. We hypothesize that labour mobility is a potential channel underpinning this effect.

Trade liberalisation, economic growth and poverty level in sub-Saharan Africa (SSA)

“…Using the period from 1980 to 2014, the results showed that economic growth and manufacturing trade significantly reduced poverty while trade specialisation had adverse effects on poverty. Durongkaveroj and Ryu (2018) examined the effects of trade on poverty in Thailand. Using two-year data (1995 and 2005) from 76 provinces, the study showed that poverty reduced in provinces with more exposure to trade.…”

Structural transformation and inequality: Does trade openness matter?

“…With these methodological challenges, identifying causal impacts of trade openness on developmental outcomes such as poverty and inequality through natural experiment and strictly exogeneous instruments is preferred. However, this method is more appropriate for estimating the economic effects of exogeneous shocks in trade policy in a single‐country case study, for example, WTO accession (Durongkaveroj & Ryu, 2019; Kis‐Katos & Sparrow, 2015) or unexpected trade reform (Topalova, 2010).…”

Research Advances and Insights on Trade Liberalisation Based on CiteSpace Analysis

“…Competition is representative of the global research on enhanced trade liberalisation. Clustering analysis of keywords means summarising and grouping keywords to show which ones belong to the same research direction [7][8]. Cluster analysis was carried out on the field of trade liberalisation to produce a clustering and timeline map of keywords in the field of trade liberalisation from 2000-2022 (Figure 4), which has a cluster module value of 0.6818 > 0.3 and an average profile value of 0.8861 > 0.7, which can be considered a significant cluster structure and reasonable clustering results [9][10].…”