Open Up or Build Up?: International and Domestic Factors of Poverty Reduction in the Developing World

Author

Katherine Grace Yoars, Southern Illinois University CarbondaleFollow

Date of Award

1-1-2009

Degree Name

Master of Arts

Department

Political Science

First Advisor

Young, Joseph

Abstract

One of the most important issues for states in the developing world is how to best reduce poverty. Do international or domestic factors matter more for poverty reduction? Does trade openness lead to increased or decreased poverty, or does the quality of domestic institutions decrease the level of poverty in a state? This thesis presents a straightforward analysis of these two explanations in the developing world. Using cross-sectional data from 1998 and 1999, I utilize ordinary least squares regression to estimate the general effects on state poverty levels of two concepts: trade openness and domestic institutions. I find that domestic institutions and level of development tend to decrease poverty in developing countries. Evidence for the link between trade openness and poverty is mixed. I then consider three additional concepts: capital openness, secure property rights, and foreign direct investment. When looking at these added international and domestic factors along with the original three, I find that capital openness and level of development have an impact on poverty reduction in the developing world, as does winning coalition size if it is given more than a year to take effect.