A Literature Survey Trade Policy Dynamics: Insights for Assessing Poverty and Inequality Impacts

Abstract

The paper embarks on a critical exploration of the intricate relationship between trade liberalization, poverty alleviation, and income distribution in the context of developing countries. Recognizing the nuanced and often divergent empirical findings in existing literature, the study seeks to offer a comprehensive review of the methodologies employed and the resulting insights gleaned from diverse research endeavors. Central to the paper's objective is the examination of the impact of trade liberalization on poverty and income inequality, acknowledging the multifaceted nature of this relationship and the varied outcomes observed across different countries and contexts. By synthesizing the findings of numerous studies, the paper aims to distill key insights and discern common trends amidst the diversity of empirical evidence. In particular, the study focuses on two prominent methodologies employed in the assessment of trade liberalization: computable general equilibrium models and micro-simulation techniques. These methodological approaches have been widely utilized by researchers and policymakers alike, offering valuable insights into the complex interplay between trade policy, economic growth, and social welfare outcomes. Through a meticulous examination of existing literature, the paper seeks to shed light on the strengths and limitations of these methodological approaches, providing guidance for future research endeavors and policy formulation efforts. By elucidating the factors influencing the impact of trade liberalization on poverty and income distribution, the study endeavors to offer actionable insights for policymakers in Laos and other developing countries grappling with trade policy decisions. Ultimately, the literature survey conducted in this paper serves as a vital resource for researchers, policymakers, and stakeholders seeking to navigate the complex terrain of trade liberalization and its implications for poverty reduction and income inequality. By synthesizing diverse perspectives and methodological approaches, the study aims to contribute to a deeper understanding of the nexus between trade policy and inclusive development, thereby informing evidence-based policy formulation and implementation strategies in Laos and beyond.