Abstract:
Globalization refers to the phenomenon of increased capital and labor mobility and
integration of related policies across the globe. Therefore, during the process of
globalization, unprecedented developments, such as a much higher international trade
level and the increased power of financial capital have played a central role in political,
economic, and social developments. Despite observing its outcomes for almost half a
century, the effects of globalization are still highly debated. The literature on this
subject is rich with, often contradictory, results. On one hand, some authors claim that
globalization decreases poverty, for example, through increasing growth rate. On the
other hand, others claim that free trade and financial globalization exacerbate extreme
poverty issue. In this paper, we examine the relationship between poverty and
globalization for the countries from different income groups and levels of development
and covering the period between 1990-2016. The results of our analysis, in which we
used fixed effects panel data models, vary depending on the income level of countries.
The evidence from the models denote that economic globalization is significantly and
positively associated with poverty for middle and high income countries. Coefficients
of trade globalization are found negative and significant for low and high income
countries, which denotes that trade globalization decreases poverty in such countries;
whereas the coefficient of financial globalization is found positive, and significant for
only middle income countries. For all countries, coefficients of economic and financial
globalization are found to be significant and positive while the coefficient of trade
globalization is found to be insignificant.
