Industrialisation, Trade Policy and Poverty Reduction: Evidence from Asia

Over recent decades, most of the developing economies of Asia achieved
reductions m absolute poverty incidence, but these reductions varied
peafly in sizc. Differences in the rate of aggregate economic growth explain
pan. but not aU of these differences. One factor that wuld be imponant is
the seaoral composition of the growlh. This paper examines the
relationship between poverty reduction outcomes and the rate of @wth in
the agricultwal, indusfrial and services sectors. It assembles available data
on the headcount mcasm of poverty incidence in East Asia (Taiwan).
Southeast Asia (Thailand, Indonesia, Malaysia and the Philippines) and
South Asia (India), from the 1960s to the 1990s. It then uses these data to
analyze the cwnomic dereminanb of changes in poverty incidence. It is
concluded that growth of a&cultun and services consistently contribute to
poverty reduction but that the contribution of industrial growth crucially
depends on the trade policy environment in which the growth occurs.