Trade, Poverty and the Lagging Regions of South Asia

Pravin Krishna, Devashish Mitra () and Asha Sundaram

No 16322, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This chapter studies the differential effects that trade openness may have on leading and lagging regions within a country. Examining data from India, we find that while trade liberalization is associated with reduced poverty, this effect is smaller in lagging states. The expected transmission of international prices to domestic prices with openness to trade is seen to be less perfect in lagging states than in leading ones, especially in the rural sector. This suggests that poverty reduction in lagging regions is impeded by the lack of exposure to international markets as opposed to another commonly argued factor - the competition to domestic production from international trade. Cross-country analysis with a sample of countries in South Asia (Bangladesh, India, Nepal, Pakistan and Sri Lanka) also suggests that countries with a smaller proportion of their populations in lagging regions experience greater reduction in poverty rates following trade liberalization. Our study confirms that though trade liberalization can bring gains, there is scope for policy to ensure that these gains are distributed more equally across sub-national regions. Our results highlight the importance of developing infrastructure including equipped ports, better and more extensive roads and communication links in exploiting gains from international trade.

JEL-codes: F1 R11 (search for similar items in EconPapers)
Date: 2010-09
Note: ITI
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Published as “Trade, Poverty and Lagging Regions in South Asia,” with Devashish Mitra and Asha Sundaram, in The Poor Half Billion in South Asia , Ejaz Ghani, ed., Oxford University Press,

Downloads: (external link)
http://www.nber.org/papers/w16322.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:16322

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w16322

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().