Abstract
Based on an extensive literature survey, the authors investigate the impact of increasing foreign direct investment and trade openness on employment, income inequality and poverty in developing countries. The first conclusion they reach is that the current wave of globalization does not automatically produce the positive effects predicted by standard trade theory. Particular outcomes tend to be country- or sector-specific. A developing country’s ability to benefit from globalization, while avoiding negative effects, is determined by institutional and endowment factors that can be addressed by sound policy-making. The article concludes with some suggestions aimed at maximizing positive effects in this way.