Agriculture Trade Openness and Poverty Reduction: A Cross-Country Analysis

Abstract

This paper explores the effects of general and agricultural trade openness on economic freedom and alongside with the quality of institutions, on income and poverty. Recent cross-country data for over 200 nations in global regions were used to estimate equations for income, poverty and economic freedom. Economic freedom appears to have positive impacts on income levels, which together with good institutions reduce poverty. It is also concluded that poverty is determined both directly and indirectly by institutions. A typical finding of this paper is that, in general, economic freedom is associated with trade openness and with agriculture trade liberalization.