Globalisation and Poverty Changes in Colombia

Assessing the final impact of globalisation on poverty is a difficult task: i) globalisation affects poverty through numerous channels; ii) some linkages are positive and some are negative and therefore cannot be analysed qualitatively but require quantitative assessments, i.e. formal numerical models; and iii) trade expansion and growth (key aspects of globalisation) are essentially macro phenomena, whereas poverty is fundamentally a micro phenomenon. In this paper we use a new method that combines a micro-simulation model and a standard CGE model. These two models are used in a sequential fashion (as in a recent paper by Robilliard et al., 2002). The CGE model and the micro-simulation model are calibrated using a recent SAM and household survey for Colombia and together they capture the structural features of the economy and its detailed income generation mechanisms. We use this framework to analyse the important income distribution and poverty changes occurred with the great ...