POVERTY, GLOBALIZATION AND THE ROLE OF STATE: A COMPARATIVE ANALYSIS FOR ISLAMIC COUNTRIES

Abstract

            This study examines the impact of globalization on cross-country poverty using a new comparable panel data set for developing countries over a long period 1970-2008. The main findings of the study are: First, openness to trade exerts adverse effects on poverty in all sample developing countries while FDI helps in reducing poverty only in OIC countries. Second, growth elasticity of poverty is negative and significant in all countries; however, the growth elasticity of poverty is high in the case of OIC countries. Third, inflation adversely affects poverty in all sample countries. Fourth and finally, the role of government is insignificant in OIC countries while it is robustly significant with a negative sign in Non-OIC countries. Thus, government spending helps in reducing poverty only in Non-OIC countries. The overall results of this study indicate that globalization accentuates not ameliorates poverty.