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5 Benin 15 Botswana 10 Chile 6 Colombia 10 5 4 0 50 0–5 20 –51940 1960 1980 2000 –51940 1960 1980 2000 –101940 1960 1980 2000 –21940 1960 1980 2000 20 Cyprus 5 Ghana 5 Guinea 10 Guinea-Bissau 100 0–5 0 50–5 –101940 1960 1980 2000 –101940 1960 1980 2000 –51940 1960 1980 2000 –101940 1960 1980 2000 10 Guyana 10 Hungary 10 Indonesia 10 Israel 0–10 50 50 50 –201940 1960 1980 2000 –51940 1960 1980 2000 –51940 1960 1980 2000 –51940 1960 1980 2000 20 Jordan 10 Korea, Republic of 105 Mali 1510 Mauritius 100 50 0–5 50 –101940 1960 1980 2000 –51940 1960 1980 2000 –101940 1960 1980 2000 –51940 1960 1980 2000 10 Mexico 10 Paraguay 10 Philippines 10 Poland 50 50 50–5 50–5 –51940 1960 1980 2000 –51940 1960 1980 2000 –101940 1960 1980 2000 –101940 1960 1980 2000 10 Taiwan 10 Tunisia 20 Uganda 10 Uruguay 864 50 100 50–5 21940 1960 1980 2000 –51940 1960 1980 2000 –101940 1960 1980 2000 –101940 1960 1980 2000 3-year MA of GrowthAverage Growth (after Trade Liberalization) Average Growth (before Trade Liberalization)Date of Liberatization F I G U R E 9 . 7 Impact of trade liberalization on economic growth. On average, trade liberalization increasesGDP growth but not always. Source: Wacziarg and Welch, Trade Liberalization and Growth: NewEvidence NBER Working Paper 10152 (2003).is not surprising that increased trade does not systematically affect inequality. Whencountries trade more, some sectors expand and others contract. If poor people work inthe sector that expands, then inequality will decline; if they are based in the sector thatcontracts, then inequality will rise. This pattern can be seen clearly in Figure 9.8—tradeliberalization often has a marked impact on inequality, sometimes for the better andsometimes for the worse. Therefore, while trade liberalization will frequently benefit
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