Abstract

The current WTO negotiations have a strong focus on development, but a number of developing countries are uncertain as to how to approach these negotiations. Trade liberalization tends to boost economic growth and contribute to the reduction of poverty in the longer term, but it may also impose important short-term adjustment costs. This paper explores the poverty implications of the current post-Doha multilateral trade reform agenda of the WTO for developing countries, so those benefits can be weighed against perceived adjustment costs. It addresses the effects of trade reform on poverty at three levels: first on developing countries as a group; then on different types of developing countries; and finally on different types of households within developing countries. The modelling results point to both opportunities and challenges provided by the WTO negotiations for developing countries seeking to trade their way out of poverty. While important gains are to be made from liberalization in the OECD countries, the paper also highlights gains to be made from policy changes in the developing countries that would help to reduce the anti-agriculture, anti-export and anti-poor bias of current policies. The paper addresses such questions as whether food-importing countries would suffer from higher food prices in international markets, and what impact reform could have on food security and poverty alleviation. The paper concludes with lessons of relevance for the domestic and trade policies of developing countries.