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The Impact of Trade Liberalization on Household Welfare and Poverty in India

Author

Listed:
  • Basanta K. Pradhan
  • Sahoo Amarendra

Abstract

A 28-sector, 3-factor and 9-household group Computable General Equilibrium (CGE) model for India is constructed to analyze the impacts of Tariffs and Non-tariff Barriers (NTBs) on the welfare and poverty of socio-economic household groups. A general cut in tariffs leads to a decrease in overall welfare and reduction in poverty, which urban households are in a relatively better position to address. The choice of a fiscal compensatory mechanism with indirect tax on domestic consumption does not substantially change the pattern of impact except that it increases overall poverty in the economy. On the other hand, quota reductions on agriculture and food products result in a gain in welfare and a bigger reduction of poverty, with rural households doing better than urban households.

Suggested Citation

  • Basanta K. Pradhan & Sahoo Amarendra, 2006. "The Impact of Trade Liberalization on Household Welfare and Poverty in India," Working Papers MPIA 2006-01, PEP-MPIA.
    • Handle: RePEc:lvl:mpiacr:2006-01
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    Citations

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    Cited by:

    1. John Gilbert, 2008. "Agricultural Trade Reform and Poverty in the Asia-Pacific: A Survey and Some New Results," Working Papers 200801, Utah State University, Department of Economics and Finance.
    2. Orlov, Anton & Grethe, Harald & McDonald, Scott, 2010. "An Economy-wide Analysis of an Increase in Energy Prices in Russia: Relevance of the Nesting Structure for Output Effects," Conference papers 331947, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    3. John Gilbert & Nilanjan Banik, 2012. "Socio-economic impacts of regional transport infrastructure in South Asia," Chapters, in: Biswa Nath Bhattacharyay & Masahiro Kawai & Rajat M. Nag (ed.), Infrastructure for Asian Connectivity, chapter 5, pages 139-163, Edward Elgar Publishing.
    4. John Gilbert, 2009. "Agricultural Trade Reform Under Doha and Poverty in India," Working Papers 2009-03, Utah State University, Department of Economics, revised 28 Jun 2009.
    5. John Gilbert & Nilanjan Banik, 2010. "Socioeconomic Impacts of Cross- Border Transport Infrastructure Development in South Asia," Development Economics Working Papers 21803, East Asian Bureau of Economic Research.
    6. Anirban Kundu, 2020. "Impact of trade liberalisation on formal–informal interlinkages in India: does sectoral labour mobility matter?," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-29, December.
    7. John Gilbert, 2008. "BIMSTEC-Japan Trade Cooperation and Poverty in Asia," Working Papers 2008-03, Utah State University, Department of Economics, revised 19 Dec 2008.
    8. John Gilbert, 2008. "Trade Policy, Poverty, and Income Distribution in CGE Models: An Application to SAFTA," Working Papers 2008-02, Utah State University, Department of Economics, revised 19 Dec 2008.
    9. 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.
    10. John Gilbert, 2011. "Trade reforms under Doha and income distribution in South Asia," STUDIES IN TRADE AND INVESTMENT, in: Trade-led growth: A sound strategy for Asia, chapter 12, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    11. John Gilbert, 2008. "Agricultural trade reform and poverty in the Asia-Pacific region: a survey and some new results," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 15(1), pages 1-34, June.
    12. Joshua Berning & David W. Holand, 2006. "Measuring the Economic Impact of Agricultural Policies in Metro and Non-Metro Regions in Washington: A Regional General Equilibrium Approach," Working Papers 2006-13, School of Economic Sciences, Washington State University.

    More about this item

    Keywords

    Computable general equilibrium (CGE) model; microsimulations; International trade; poverty; India;
    All these keywords.

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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