Globalization, growth, inequality, and social safety nets in APEC economies

Abstract

This paper examines the forward linkage between trade liberalization and economic growth, economic growth and income inequality, and income inequality and economic growth, and inequality and social safety nets. It then suggests the directions for strengthening the social safety net in APEC member economies. The paper reviews major studies in recent years and concludes that in many countries trade openness is associated with more rapid growth, and economic growth with increased inequality. In addition, it shows that inequality is harmful for growth, and social safety nets are necessary for dealing with negative effects of growth engendered by trade and investment openness. © 2002 Asian Development Bank.