Globalization and Inclusive Growth: Can They Go Hand in Hand in Developing Countries?

  • Rupa DuttaguptaEmail author
  • Sandra Lizarazo Ruiz
  • Angelica Martinez Leyva
  • Marina Mendes Tavares
Conference paper


Low-income developing countries (LIDC) have experienced a rapid increase in economic integration since the early 1990s. This chapter builds a dynamic general equilibrium model that captures important structural characteristics of LIDCs—a large agriculture sector, productivity gaps, and limited financial inclusion—to identify the channels through which integration can affect inclusive growth. The model is used to quantify the growth and distributional effects of the economic and financial liberalization in Ghana in the early 1990s. The results suggest that liberalization contributed significantly to Ghana’s growth take-off and poverty alleviation in 1990–2000. However, with limited labor mobility and persistent skill gaps between sectors, the benefits of integration, particularly from the financial liberalization channel, are concentrated in households with more human capital and access to finance, resulting in higher income inequality.



This research work is part of a project on Macroeconomic Research on Low-Income Countries supported by the U.K.’s Department for International Development (DFID). The views expressed here are the views of the authors and do not necessarily represent those of the IMF, its Executive Board, IMF Management, or DFID. We thank Annalisa Fedelino, Davide Furceri, Leandro Medina, Chris Papageorgiou, and participants of the XXIX Villa Mondragone International Economic Seminar (June 2017) for helpful comments.


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Copyright information

© Springer Nature Switzerland AG 2018

Authors and Affiliations

  • Rupa Duttagupta
    • 1
    Email author
  • Sandra Lizarazo Ruiz
    • 1
  • Angelica Martinez Leyva
    • 1
  • Marina Mendes Tavares
    • 1
  1. 1.International Monetary FundWashington D.C.USA

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