A framework to analyse linkages between trade policy, poverty reduction and sustainable development

Type Working Paper
Title A framework to analyse linkages between trade policy, poverty reduction and sustainable development
Publication (Day/Month/Year) 2004
URL http://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/2334.pdf
This paper presents a framework of analysis for examining the impact of changes in trade regimes on poverty. It aims to guide research undertaken in case study countries as part of the Africa Trade and Poverty Programme (ATTP).
Underpinning this framework is the belief that policy matters, that trade policy affects trade, and that trade then has effects on both economic growth and poverty. Positive and negative, direct and indirect effects will result from a country opening its markets to a greater volume and range of traded goods and services and in easing restrictions on exports. Impacts will affect segments of the population and sectors of the economy differentially over the short, medium and long term, and these effects may intensify the poverty of one group of people over the short term, while decreasing the poverty of another over the longer term.
In this paper we discuss alternative approaches to the definition and measurement of poverty. Traditional definitions of poverty, which were income and consumption based, are no longer considered to be adequate. More complex understandings of poverty have developed which recognise the importance of risk and vulnerability, multidimensionality, capabilities and freedoms and the involvement of the poor in identifying, defining and analysing poverty through participatory poverty assessments (PPAs).
This paper highlights the importance of having a differentiated understanding of poverty which disaggregates national level poverty data by region and where possible separates out the severely poor from the less poor, and the chronically poor from the seasonally or transitorily poor. It is also useful to have information on concentrations of poor people by social and livelihood groups or economic sectors, as this sharpens the predictive power of any analysis of the likely impact of trade policy change on the poor. The livelihoods in which the poor are concentrated may differ from country to country but are likely to include activities characterised by low barriers to entry (including skills requirements), low wages and high levels of drudgery or risk. These groups will include peasant or smallholder farmers; casual labourers (including the landless); urban industrial workers and some service providers.

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