Planning and Budgeting

For the sustainable success of "globalization", it is important to investigate how expanding its aspects affect poverty. To determine the dimensions of this subject, in this study we hypothesize negative relationship between poverty and financial or trade openness, using the model by Dollar and Kraay. We employ a panel data method using data for the years 1960-2012 on 31 countries. We have also categorized countries into two parts including developed and developing ones and identified a significant difference in the impact of policies. Because of data limitations we only use the two variables “ratio of exports and imports to GDP”, and “foreign direct investment relative to GDP”, as the two criteria of various aspects of globalization. The results show that while the posit  ive effect of trade openness in developing countries on increment of average income of the poor cannot be rejected; on the other side, effects of financial openness in developed and developing countries are different. So that it negatively, affects the income of the poor in the developing countries. This result suggests that to achieve sustainable success of financial and trade openness in developing countries, the latter should precede the former.