Effect of Economic Sectors Growth Rate and Trade Liberalization on Poverty Reduction in Iran

Abstract Regarding to the reduction of poverty and inequality of income distribution is top priority, especially in developing countries; in this paper the impact of trade liberalization and economic sectors growth on poverty were evaluated. For this purpose according to Mathur (2003), effective of different variables on poverty and Gini coefficient using ordinary least square has been surveyed in 1959-2008. Results show that in the long term, trade liberalization can lead to better income distribution and poverty reduction. Agricultural sector is one of the biggest sectors and most of the poor people are in the agricultural sector, therefore agricultural growth and then income in the this sector is very important for success in poverty reduction policies. Also, estimates show positive effect of trade liberalization, per capita income and value added of agriculture sector to reduce poverty. So for poverty reduction, development of agriculture sector compared to other economic sectors and trade liberalization on long time can reduce poverty.