IDEAS home Printed from https://ideas.repec.org/a/sae/soueco/v10y2009i2p325-369.html
   My bibliography  Save this article

Impact of Trade Liberalization on Poverty in Bangladesh

Author

Listed:
  • Bodrun Nahar

    (Bodrun Nahar is an Associate Professor in Department of Economics, University of Chittagong and currently, a PhD candidate, School of Business, Economics and Public Policy, University of New England, NSW 2351, Australia. Email: bnahar2@une.edu.au)

  • Mahinda Siriwardana

    (Mahinda Siriwardana (corresponding author) is a Professor in School of Business, Economics and Public Policy, University of New England, NSW 2351, Australia. Email: asiriwar@une.edu.au)

Abstract

This article uses a computable general equilibrium (CGE) model to investigate the impact of trade liberalization on poverty in Bangladesh. The simulation results show that the complete removal of tariffs favours export-oriented sectors in the economy. With trade liberalization, rural and urban areas experience an overall reduction in poverty in the short run. However, a marginal increase in the poverty gap and severity of poverty for urban areas is projected, implying that the poor become poorer in urban areas. Moreover, poverty incidences vary among various socio-economic groups. In the short run, poverty incidence increases for rural landless and urban illiterate and low-educated household groups. In contrast, the long-run results highlight that trade liberalization reduces absolute poverty for all groups, both in rural and urban areas.

Suggested Citation

  • Bodrun Nahar & Mahinda Siriwardana, 2009. "Impact of Trade Liberalization on Poverty in Bangladesh," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 10(2), pages 325-369, July.
    • Handle: RePEc:sae:soueco:v:10:y:2009:i:2:p:325-369
    DOI: 10.1177/139156140901000204
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/139156140901000204
    Download Restriction: no
    File URL: https://libkey.io/10.1177/139156140901000204?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. de Janvry, Alain & Sadoulet, Elisabeth & Fargeix, Andre, 1991. "Politically feasible and equitable adjustment: Some alternatives for ecuador," World Development, Elsevier, vol. 19(11), pages 1577-1594, November.
    2. Khondker, Bazlul H. & Raihan, Selim, 2004. "Welfare and Poverty Impacts of Policy Reforms in Bangladesh: A General Equilibrium Approach," Centre on Regulation and Competition (CRC) Working papers 30588, University of Manchester, Institute for Development Policy and Management (IDPM).
    3. Chia, Ngee-Choon & Wahba, Sadek & Whalley, John, 1994. "Poverty-Reducing Targeting Programmes: A General Equilibrium Approach," Journal of African Economies, Centre for the Study of African Economies, vol. 3(2), pages 309-338, October.
    4. Jean-Yves Duclos & Abdelkrim Araar, 2006. "Poverty and Equity," Economic Studies in Inequality, Social Exclusion, and Well-Being, Springer, number 978-0-387-33318-2, Fall.
    5. Ravallion, Martin & Bidani, Benu, 1994. "How Robust Is a Poverty Profile?," The World Bank Economic Review, World Bank, vol. 8(1), pages 75-102, January.
    6. Decaluwe, B. & Patry, A. & Savard, L. & Thorbecke, E., 1999. "Poverty Analysis Within a General Equilibrium Framework," Cahiers de recherche 9909, Université Laval - Département d'économique.
    7. Mr. Akhtar Akhtar Hossain, 2002. "Exchange Rate Responses to Inflation in Bangladesh," IMF Working Papers 2002/166, International Monetary Fund.
    8. Ravallion, Martin & Sen, Binayak, 1996. "When Method Matters: Monitoring Poverty in Bangladesh," Economic Development and Cultural Change, University of Chicago Press, vol. 44(4), pages 761-792, July.
    9. Mahabub Hossain & Firdousi Naher & Quazi Shahabuddin, 2005. "Food Security and Nutrition in Bangladesh: Progress and Determinants," The Electronic Journal of Agricultural and Development Economics, Food and Agriculture Organization of the United Nations, vol. 2(2), pages 103-132.
    10. Nabil Annabi & H. Khondker Bazlul & Selim Raihan & John Cockburn & Bernard Decaluwe, 2005. "Implications of WTO Agreements and Domestic Trade Policy Reforms for Poverty in Bangladesh: Short vs. Long Run," Working Papers MPIA 2005-02, PEP-MPIA.
    11. J. Mark Horridge & Brian R. Parmenter & Martin Cameron & Riaan Joubert & Areef Suleman & Dawie de Jongh, 1995. "The Macroeconomic, Industrial, Distributional and Regional Effects of Government Spending Programs in South Africa," Centre of Policy Studies/IMPACT Centre Working Papers g-109, Victoria University, Centre of Policy Studies/IMPACT Centre.
    12. International Monetary Fund, 2008. "Bangladesh: Selected Issues," IMF Staff Country Reports 2008/335, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. De, Prabir & Raihan, Selim & Kathuria, Sanjay, 2012. "Unlocking Bangladesh-India trade : emerging potential and the way forward," Policy Research Working Paper Series 6155, The World Bank.
    2. Dayal Talukder, 2014. "Agricultural Trade Liberalization and Poverty in Rural Bangladesh," Poverty & Public Policy, John Wiley & Sons, vol. 6(3), pages 282-307, September.
    3. Khan, Muhammad Aamir, 2017. "Regional Trade and Economic Development: Options for Pakistan," Conference papers 332899, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    4. Obeng, Camara Kwasi, 2014. "Impact of import liberalisation on poverty: a dynamic computable general equilibrium and microsimulation analysis for Ghana," MPRA Paper 58182, University Library of Munich, Germany.
    5. Ziaur Rahman, 2014. "The impact of trade liberalization on poverty reduction in Bangladesh: A computable general equilibrium (CGE) analysis," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 4(4), pages 240-253, April.
    6. Muhammad Ali & Anisul Islam, 2014. "Agribusiness Potentials for Bangladesh — an Analysis," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(3), pages 233-247.
    7. Dayal Talukder & Love Chile, 2018. "Technological Innovation And Total Factor Productivity Growth Of Rice Production In Bangladesh In The Post-Liberalisation Era," Global Economic Observer, "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences;Institute for World Economy of the Romanian Academy, vol. 6(2), pages 50-70, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nahar, Bodrun & Siriwardana, Mahinda, 2009. "Trade Liberalisation and Poverty in Bangladesh: A General Equilibrium Approach," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 47629, Australian Agricultural and Resource Economics Society.
    2. Bodrun Nahar & Mahinda Siriwardana, 2013. "Trade Opening, Fiscal Reforms, Poverty, and Inequality: A CGE Analysis for Bangladesh," The Developing Economies, Institute of Developing Economies, vol. 51(2), pages 145-185, June.
    3. Liyanaarachchi, Tilak S. & Naranpanawa, Athula & Bandara, Jayatilleke S., 2016. "Impact of trade liberalisation on labour market and poverty in Sri Lanka. An integrated macro-micro modelling approach," Economic Modelling, Elsevier, vol. 59(C), pages 102-115.
    4. Haider A. Khan, 2007. "Social Accounting Matrix: A Very Short Introduction for Economic Modeling," CIRJE F-Series CIRJE-F-477, CIRJE, Faculty of Economics, University of Tokyo.
    5. F. le R. Booysen, 2001. "Non‐Payment Of Services: A Problem Of Ability‐To‐Pay," South African Journal of Economics, Economic Society of South Africa, vol. 69(4), pages 674-697, December.
    6. Pyakuryal, Bishwambher & Roy, Devesh & Thapa, Y.B., 2010. "Trade liberalization and food security in Nepal," Food Policy, Elsevier, vol. 35(1), pages 20-31, February.
    7. Dorothée Boccanfuso & Luc Savard, 2005. "Impact Analysis of the Liberalization of Groundnut Production in Senegal: A Multi-household Computable General Equilibrium Model," Cahiers de recherche 05-12, Departement d'économique de l'École de gestion à l'Université de Sherbrooke.
    8. John Cockburn & Bernard Decaluwe & Veronique Robichaud, 2007. "Trade liberalization and poverty - lessons from Asia and Africa," STUDIES IN TRADE AND INVESTMENT, in: Mia Mikic (ed.), FUTURE TRADE RESEARCH AREAS THAT MATTER TO DEVELOPING COUNTRY POLICYMAKERS, volume 61, chapter 4, pages 103-121, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    9. Liyanaarachchi, Tilak Susantha & Bandara, Layatilleke S. & Naranpanawa, Athula, 2014. "A Quantitive Evaluation of the Potential Effects of Trade Policy Reversal in Sri Lanka: A Computable General Equilibrium (CGE) Analysis," Sri Lankan Journal of Agricultural Economics, Sri Lanka Agricultural Economics Association (SAEA), vol. 16, pages 1-26, November.
    10. AKA, Bedia François, 2016. "Quantitative Impacts Of Basic Income Grant On Income Distribution In Cote D’Ivoire: Time To Change Our Societies," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 25(1), pages 159-170.
    11. Ravallion, Martin & Lokshin, Michael, 2003. "On the utility consistency of poverty lines," Policy Research Working Paper Series 3157, The World Bank.
    12. Dorothée Boccanfuso & Bernard Decaluwé & Luc Savard, 2008. "Poverty, income distribution and CGE micro-simulation modeling: Does the functional form of distribution matter?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 6(2), pages 149-184, June.
    13. Gelaw, Fekadu, 2013. "Inefficiency and Incapability Gaps as Causes of Poverty: A Poverty Line-Augmented Efficiency Analysis Using Stochastic Distance Function," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 8(2), pages 1-45, August.
    14. Decaluwé, Bernard & Dumont, Jean-Christophe & Savard, Luc, 2000. "Measuring Poverty and Inequality in a Computable General Equilibrium Model," Cahiers de recherche 9926, Université Laval - Département d'économique.
    15. Nabil Annabi & Fatou Cissé & John Cockburn & Bernard Decaluwé, 2005. "Trade Liberalisation, Growth and Poverty in Senegal: a Dynamic Microsimulation CGE Model Analysis," Cahiers de recherche 0512, CIRPEE.
    16. Dorothée Boccanfuso & Luc Savard, 2005. "Analyse d’Impact de la Construction de l’Autoroute Dakar-Thies : un Modèle Equilibre Géneral Calculable Multi-Ménages Intégrés," Cahiers de recherche 05-11, Departement d'économique de l'École de gestion à l'Université de Sherbrooke.
    17. N.M. Nkang & B.T. Omonona & S.A. Yusuf & O.A. Oni, 2013. "Simulating the Impact of Exogenous Food Price Shock on Agriculture and the Poor in Nigeria: Results from a Computable General Equilibrium Model," Economic Analysis and Policy, Elsevier, vol. 43(1), pages 79-94, March.
    18. Niven Winchester, 2008. "Searching for the Smoking Gun: Did Trade Hurt Unskilled Workers?," The Economic Record, The Economic Society of Australia, vol. 84(265), pages 141-156, June.
    19. Itakura, Ken & van der Mensbrugghe, Dominique, 2011. "Calibrating the Modified An Implicitly Directly Additive Demand System (MAIDADS) for Applied Economic Modeling," Conference papers 332140, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    20. Del Gatto, Massimo & Mion, Giordano & Ottaviano, Gianmarco I.P., 2006. "Trade Integration, Firm Selection and the Costs of Non-Europe," Conference papers 331548, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

    More about this item

    Keywords

    JEL: F13; JEL: I32; JEL: C68; Bangladesh; Computable General Equilibrium (CGE); Poverty; Trade; Trade Policy;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:soueco:v:10:y:2009:i:2:p:325-369. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.ips.lk/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.