estimated "distribution effect" is not significantly different from zero although it happens to be in favor of the poor.

We also show in Figure 6 the estimated effect of stabilization from high inflation. We emphasized that these reformers are doing lots of things and that it is difficult to estimate the separate effect of individual reforms. The globalizers reduced inflation from an average of 24% per annum in the early 1980s to 12% in the late 1990s. Our point estimate is that this would increase the growth rate of income of the poor by about 0.4 percentage points per year. About half of this is due to the beneficial effect on overall growth of stabilizing from high inflation, and half of it reflects a positive distributional effect of stabilizing from very high inflation. This is quite consistent with a growing body of evidence that inflation is disproportionately hard on the poor.

One should be careful not to take this exercise too literally. Still, it is a useful way of summarizing the average relationships in a large panel of countries, emphasizing the magnitude of the growth and distributional effects of policies. Countries that reduced inflation and expanded trade saw their growth rates accelerate over the past 20 years. They did not have significant changes in income distribution. Thus, the growth rate of income of the poor generally increased. The amount of trade expansion and stabilization observed in our globalizing group was typically associated with a higher growth rate of income of the poor of about 3 percentage points per year.

To relate the cross-country findings on trade and inequality back to the specific countries in our globalizing group: some have had increases in household income inequality over the past 20 years, most notably China. But it is not true in general that the liberalizing economies have had increases in inequality. Costa Rica's and the Philippines' income distributions have been quite stable. Inequality has declined in Malaysia and Thailand. Mexico had an increase in inequality in the 1980s followed by a decline in inequality in the 1990s. Since most of the countries have had only relatively small changes in household income inequality, the growth rate of income of the poor is closely related to the growth rate of per capita GDP.

Although Vietnam is not included among our globalizers (due to limits on the availability of data we use to identify the other globalizers), it nicely illustrates our main finding about trade and poverty. As Vietnam has opened up, it has had a large increase in per capita GDP and no significant change in inequality. Thus, income of the poor has risen dramatically, and the level of absolute poverty has dropped sharply, from 75% of the population in 1988 to 37% in 1998 -- poverty was cut in half in ten years! In the case of Vietnam we have particularly good data, because a representative household survey was conducted early in the reform process (1992-93), and then the same 5,000 households were visited again six years later. Of the poorest 5% of households in 1992, 98% had higher income six years later. Since Vietnam's opening has resulted in exports of rice (produced by most of the poor farmers) and labor5