Centre for Economic Performance

This paper is an output from a project funded by the UK Department for International Development (DfID) for the benefit of developing countries. The views expressed are not necessarily those of DfID. I am grateful to Xavier Cirera for research assistance, Shoshana Ormonde for logistical help and to Tricia Feeney, Subir Gokarn, Caroline Lequesne, Michael Lipton, Andrew McKay, Neil McCulloch, Pradeep Mehta, Chris Stevens, Howard White, and Adrian Wood, and participants in the World Bank's meeting on 'Openness, Macroeconomic Crises and Poverty ' Kuala Lampur, May 10-12th 1999 for comments and advice. 1Trade Liberalisation and Poverty 1. Background Openness and trade liberalisation have been a major component of conventional economic policy advice for the last fifteen years. Their advocates identify strong benefits from them in terms of both resource allocation and economic growth. While there remain some critics of such policies, there is widespread acceptance that in the long run open economies fare better in aggregate than do closed ones, and that relatively open policies contribute to long-run development. Many commentators fear