Trade Liberalization and Poverty in Bangladesh
AbstractThe impact of trade liberalization on growth and employment is a much debated and controversial issue. In theory, trade liberalization results in productivity gains through increased competition, efficiency, innovation and acquisition of new technology. Trade policy works by inducing substitution effects in the production and consumption of goods and services through changes in price. These factors, in turn, influence the level and composition of exports and imports. In particular, the changing relative price induced by trade liberalization causes a more efficient reallocation of resources. Trade liberalization is also seen as expanding economic opportunities by enlarging the market size and enhancing the impact of knowledge spillover. However, empirical evidence to support these propositions is far from conclusive. Both cross-country and country-specific studies have failed to suggest any conclusive evidence to support the claim that trade liberalization promotes economic growth and aids net employment generation. There have been concerns over whether the impact of trade liberalization has been favourable to the domestic economy in Bangladesh. There is a lack of consensus on the issue. There is also continuing debate over the future direction of trade liberalization in Bangladesh. Questions have been raised over whether Bangladesh ought to undertake further drastic wholesale liberalization of trade or adopt a more gradual approach. Against this backdrop, this paper assesses trade liberalization in Bangladesh and examines its impact on growth and employment in the country.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 37905.
Date of creation: Dec 2008
Date of revision:
Trade Liberalization; Economic Growth; Poverty; Bangladesh;
Find related papers by JEL classification:
- F10 - International Economics - - Trade - - - General
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
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