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Trade Liberalization, Poverty and Inequality Nexus: A Case Study of India

  • Rana Ejaz Ali Khan

    ()

    (Associate Professor/Head Department of Management Sciences. COMSATS Institute of Information Technology,Sahiwal, Pakistan)

  • Nadia Bashir

    ()

    (Department of Economics,The Islamia University of Bahawalpur, Pakistan)

The paper attempted to see the relationship between trade liberalization and poverty and inequality in India. For trade liberalization, volume of trade as ratio of GDP, head count ratio for poverty and Gini-coefficient has been used for income inequality. The granger causality technique is applied to time series data for the years 1970-2009. The results indicate that trade has no significant effect on poverty and poverty has no effect on trade. However, trade has increased inequality in the short-run and inequality affected the trade in the long-run negatively. It partially contradicts the prediction of the Stolper- Samuelson theorem.

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Article provided by Asian Economic and Social Society in its journal Asian Economic and Financial Review.

Volume (Year): 1 (2011)
Issue (Month): 3 (September)
Pages: 114-119

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Handle: RePEc:asi:aeafrj:2011:p:114-119
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  1. Petia Topalova, 2005. "Trade Liberalization, Poverty, and Inequality: Evidence from Indian Districts," NBER Working Papers 11614, National Bureau of Economic Research, Inc.
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  3. 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.
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  6. Chris Papageorgiou & Subir Lall & Florence Jaumotte, 2008. "Rising Income Inequality; Technology, o+L3904r Trade and Financial Globalization?," IMF Working Papers 08/185, International Monetary Fund.
  7. Toda, Hiro Y. & Yamamoto, Taku, 1995. "Statistical inference in vector autoregressions with possibly integrated processes," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 225-250.
  8. Mosconi, Rocco & Giannini, Carlo, 1992. "Non-causality in Cointegrated Systems: Representation Estimation and Testing," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 399-417, August.
  9. Alejandro Cuñat & Marco Maffezzoli, . "Growth and Interdependence under Complete Specialization," Working Papers 183, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  10. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
  11. Neutel, Marcel & Heshmati, Almas, 2006. "Globalisation, Inequality and Poverty Relationships: A Cross Country Evidence," IZA Discussion Papers 2223, Institute for the Study of Labor (IZA).
  12. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
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