Effect of the Duty-Free and Quota-Free Market Access Schemes for Least Developed Countries on Income Inequality and Poverty

Abstract

This paper has examined whether the Duty-Free and Quota-Free (DFQF) market access preference schemes provided by Members of the World Trade Organization (WTO) to Least developed countries (LDCs) have been instrumental in reducing income inequality and poverty in these countries. The analysis has used the entropy balancing method over an unbalanced panel dataset of 36 LDCs (treatment group) and 19 countries in the control group, with data spanning the period 1997–2018. The feasible generalized least squares, the within fixed effects and the Seemingly Unrelated Regression estimators have been employed to address empirically the question. The analysis has established that the DFQF schemes have genuinely been instrumental in reducing income inequality and poverty in LDCs, including to a greater extent in non-African LDCs than in African LDCs. These findings confirm the importance of the DFQF schemes for LDCs.