Free Trade, Poverty, and Inequality

Anyone familiar with The Economist knows the mantra: Free trade will ameliorate poverty by increasing growth and reducing inequality. This paper suggests that problems underlying measurement of poverty, inequality, and free trade provide reason to worry about this argument. Furthermore, the paper suggests that better evidence is necessary to establish that free trade is causing inequality and poverty to fall. Experimental studies usually provide the best evidence of causation. So, the paper concludes with a call for further research into the prospects for ethically acceptable experimental testing of free trade's impact on poverty and inequality. Although the paper is unabashedly methodological, its conclusions bear on many ethical debates. Ethicists sometimes argue, for instance, that there is reason to encourage free trade because they believe free trade is decreasing poverty and inequality. Clarifying the empirical facts may not settle ethical debates but it may inform them.