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Trade and poverty nexus: A case study of Sri Lanka

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  • Naranpanawa, Athula
  • Bandara, Jayatilleke S.
  • Selvanathan, Saroja

Abstract

The link between trade liberalisation and poverty has become one of the most debated topics in recent years. There is a growing body of empirical literature on this topic and many studies provide mixed results. In this study, Sri Lanka is used as a detailed case study and a computable general equilibrium (CGE) approach is used as an analytical framework to examine the trade-poverty nexus. The results suggest that, liberalisation of the manufacturing industries is more pro-poor than that of the agricultural industries. Overall, this study suggests that trade reforms may widen the income gap between the rich and the poor creating uneven gains across different household groups in Sri Lanka. While short-term complementary policies are needed to compensate vulnerable income groups, long-term policies are needed to make gains from trade liberalisation more inclusive and equitable to maintain economic and political stability in Sri Lanka.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Policy Modeling.

Volume (Year): 33 (2011)
Issue (Month): 2 (March)
Pages: 328-346

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Handle: RePEc:eee:jpolmo:v:33:y:2011:i:2:p:328-346

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Web page: http://www.elsevier.com/locate/inca/505735

Related research

Keywords: Poverty Trade liberalisation Computable general equilibrium model Income distribution South Asia Sri Lanka;

References

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  2. Decaluwe, B. & Patry, A. & Savard, L., 1998. "Income Distribution, Poverty Measures and Trade Shocks: A Computable General Equilibrium Model of a Archetype Developing Country," Papers 9812, Laval - Recherche en Politique Economique.
  3. John Cockburn, 2002. "Trade Liberalisation and Poverty in Nepal A Computable General Equilibrium Micro Simulation Analysis," Economics Series Working Papers WPS/2002-11, University of Oxford, Department of Economics.
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  16. Ann Harrison & Margaret McMillan, 2007. "On the links between globalization and poverty," Journal of Economic Inequality, Springer, vol. 5(1), pages 123-134, April.
  17. Pinelopi K. Goldberg & Nina Pavcnik, 2004. "Trade, Inequality, and Poverty: What Do We Know? Evidence from Recent Trade Liberalization Episodes in Developing Countries," NBER Working Papers 10593, National Bureau of Economic Research, Inc.
  18. Srinivasan, T. N., 1994. "Data base for development analysis Data base for development analysis: An overview," Journal of Development Economics, Elsevier, vol. 44(1), pages 3-27, June.
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