The Role of International Trade in Poverty

Growing the economy is the most important need for decreasing or eradicating poverty. Poverty will be reduced as a direct result of higher economic development. Every nation's GDP rises as a consequence of the opening of trade since it enables each country to utilize its own resources to create products and services more cheaply. Trade also contributes to the eradication of poverty by opening up a huge number of employment possibilities and providing direct access to the external market for goods produced by the poor. In this article, we'll look at how initiatives to cut the cost of trade and to integrate the market might benefit the poorest members of society. It offers a route for the impoverished to join the mainstream economy. Poor people face a wide range of hardships, including chronic hunger and malnutrition, homelessness, a lack of durable goods, disease, a lack of access to clean water, social exclusion and discrimination, high unemployment, and a high rate of infant and maternal death.

Ms. Madhavi patkar (2018) Improving access to goods and services via commerce is essential to alleviating global poverty and so should be prioritized. The expanded scope was made possible by reducing trade barriers, which resulted in a more tightly connected market for products and services. But trading isn't the end of the story. The average person has a rudimentary awareness of how commerce improves livelihoods, raises incomes, and provides people more options. As a result of this, it may be concluded that commerce has a significant impact on reducing poverty. As a result of international commerce and market integration, severe poverty has fallen by an estimated $1 billion during the 1990s. Pepita Barlow et.al (2021) Trade and globalization have led to the COVID-19 pandemic, which has spread via established trade and travel channels. The pandemic, on the other hand, has an effect on global commerce by reducing both supply and demand. In this Viewpoint, we discuss the many health concerns and possible solutions. Reductions in tariffs and taxes have led to budget shortages and a general drop in economic activity, which in many instances has resulted in recessions, threats to social safety nets, and increasing precariousness in income, job, and food security. These are all problems. However, the epidemic has also brought some short-term advantages, such as to the environment, in extreme circumstances. Looking forward, there will be a lot of pressure on trade policy reform, but it is crucial that trade policy be guided by its various ramifications for health so that the advantages are maximized and hazards are minimized by active identification and mitigation. Raj M.Desai et.al (2019) Social safeguards for low-income people are impacted by trade movements. However, even after a half-century of decline in the proportion of the world's population deemed "very" poor, many of those who have risen over the global poverty line remain susceptible to shocks that might put them back into poverty once again. In order to keep their salaries stable, these are the categories who need social protection. Trade liberalization, uncertainties, and challenges to social stability that come from this type of trading. Social protection in developing nations is examined in terms of expenditure, coverage, and adequacy during the previous two decades as a result of changes in trade components. Trade disaggregation may help us better understand which foreign market determinants promote the extension of social protection, contrary to prior research. Nations that are net food and agricultural exporters offer higher social protection than countries that post agricultural trade deficits, according to trade balance data. In contrast, nations with large industrial trade surpluses tend to have lower social protection coverage. According to our reasoning, governments of net agricultural exporters have an incentive to engage in social programs that provide eligibility to rural poor people. Global supply networks may constrain the ability of governments to provide social protection in countries that rely heavily on manufacturing exports. Nwabueze Prince Okenna (2020) When it comes to the development of a country's economy, the importance of international commerce, or foreign trade, cannot be overemphasized. Especially in agricultural nations with rich arable land, its importance and contributions to gross domestic product (GDP), job generation (employment creation), economic growth (economic development), and poverty reduction have been too obvious to ignore. It is the primary goal of this article to investigate in detail the contributions and the link between international commerce and the economic growth of emerging African nations. According to this, macroeconomic measures that stimulate and amplify the multiplier impact of these international exchanges should be implemented. Tariffs, import/export levies, government subsidies, and other measures to encourage international commerce are all included in these plans. The study also found that international commerce is an important macroeconomic driver in any economy and should be supported in emerging African countries because of its multiplier effects, which have the ability to advance these nations' development objectives. This can only be accomplished by developing their own localized macroeconomic policies, not just copying the policies of the more developed European and Asian countries. From 2000 to 2019, secondary data from the World Bank and the UNCTAD on emerging African nations was used to compile this research. The data covered a time span from 2000 to 2019. Using this data, a 15-year projection was also launched to offer developing nations with long-term insight into the benefits of these trade operations on their GDP. SheereenFauzel (2020) Many have argued about the importance of foreign commerce to economic growth in the past. According to comparative advantage theory, commerce is good for the nation as a whole and helps the poor. But social economists argue that commerce may help alleviate poverty and create jobs. The impoverished may also be harmed as a result of trade, according to empirical investigations. The growing disparity between rich and poor nations as a result of free trade has the potential to exacerbate poverty. It was decided to conduct a quantitative study of trade's influence on poverty reduction because of dispute in this area. During the 1990–2017 era, Mauritius is examined as a case study. Trade decreases poverty in the long run rather than the short term, according to the study's dynamic econometric methodology, the vector error correction model. In addition, the research demonstrates that both economic development and education are critical in the fight against poverty in the nation. A poverty-reduction program based on exports is thus highly recommended since it will help disadvantaged areas become more involved in commerce. In order to alleviate poverty, further social safeguards and social policies, such as the distribution of welfare payments, should be implemented.

Households and the market have been directly touched by trade, and every change in the price of products and services has an effect on both.

Using a multi-case study approach, this study looked at two of the world's poorest nations, India and Pakistan. International trade factors and variables that have an impact on this critical part of human development are the study's starting point thematically. Data on trade and poverty performance metrics must be gathered next. Using the suggested

poverty alleviation programs are successful. Data collection The study's empirical goal is to examine the effects of different nation characteristics on exports' ability to reduce poverty. The sample used for this analysis spans the years 1996–2012 and includes time series data for India. The main completion rate is used to calculate this, and the information comes from a UNESCO database. Not all of the years in question are covered by this data. Because of this, if data is not available for a single year, the average of two years on each side of that particular year are utilized in order to match this with poverty statistics. Macroeconomic stability is determined using the World Bank's Development Indicators consumer price index, which is measured in constant 2011 US dollars. Finally, the World Bank Governance indicators include the Rule of Law index, which measures the robustness of the legal system. Using this data, we can only go back as far as 1996, which limits our time frame to 1996-2012.

Data from the whole sample are shown in Table 1. This chart shows that 35% of the world's population is poor, defined as having a daily income of less than $1.25 (the international poverty line). It is estimated that on average, the income difference between those

Source: Author‟s calculation *. Correlation is significant at the 0.05 level (2-tailed). **. Correlation is significant at the 0.01 level (2-tailed). Table 2 displays the study's correlation matrix, which reveals the relationships between the various variables. As defined by Wikipedia, "A correlation matrix is a table demonstrating correlation coefficients between sets of data." A correlation exists between each row's random variable (Xi) and every row's other row's value (Xj). Exports are shown to be adversely connected with both the number of people living in poverty and the size of the poverty gap in this matrix. Other control variables are also highly correlated, thus they should be included in the model for completeness' sake.

Figure 1: Poverty and Export Intensity Source: Author‟s calculation

In spite of the overwhelming evidence that international trade is good for the economy and reduces poverty, there are still some theoretical disputes since new data has shown that international trade does not always result in growth. Further explanations reveal that development can only occur in conjunction with technical progress (Antumes, 2012). In order for international commerce to have a significant influence on a particular jurisdiction, there must first be a set of tactics, methodologies, practices, and circumstances established. The essential variables for international commerce in this research are the poverty headcount index, the poverty gap, trade openness, inflation, GDP per capita, private credit/GDP, and law and order. International Trade in India Since 2010, India's GDP has grown at an annual rate of 6.4 percent and GNI per capita has increased from $100 in 1972 to $1,480 in 2017, according to a data from the World Bank. During 2014, the World Bank's criterion for low-middle-income nations has been exceeded. In terms of global commerce, India is the world's second-largest exporter of ready-to-wear apparel, behind China. Poverty Rate Percentage (2011PPP $1.90/day): 8.5, GINI Coefficient: 32.1, as of 2017. Exports of leather, fish, clothing, and frozen seafood, among other things, accounted for 38% of India GDP in 2018, according to a World Bank research. Imports of equipment and items made from oil accounted for 38%. (OEC). Most of India's exports go to the European Union (EU), China, and the United States (US), while the most of its imports come from Singapore, Thailand, and Indonesia. For example, as compared to low-middle income nations like India, customs taxes in India seem to be greater than in other countries, thus the government has implemented a variety of policies to reduce trade barriers, including the customs duty recovery system. An increase in both According to this statistics, India still has a long way to go in bridging the gap between imports and exports: in reality, India has maintained a negative trade balance since independence, and its deficits are funded by expatriate transfers and foreign assistance. India's entire trade balance (imports (USD10.4 billion) + exports (USD2.9 billion)) is predicted to be USD-21.3 billion, with a USD -16.9 billion trade balance. In the first six months of the 2019-2020 fiscal year, the trade deficit widened by 5.4%. (Central Bank of India, 2019). GINI coefficient for India between 1983 and 2016 was 30.36 index points, with a low of 25.9 index points in 1983 and a high of 33.4 index points in 2000, according to an early 2020 global economic study. In 2016, India's GINI score was 32.4 points. Income distribution in an economy is measured by the Gini index, which is a measure of how far it deviates from a completely equal distribution. When the GINI index is zero, there is no inequality, and when it is 100, there is a lot of disparity. Because of this, India has a lower than average inequality index. India's poverty rate has fallen from 44.2 percent in 1991 to 13.8 percent in 2017, based on an international poverty level of $1.90 per person per day. Several economic indices have improved as a consequence of this progress: life expectancy, per capita food output, and literacy rates have all increased by over 6 percent over the last 10 years, hitting an all-time high of 7.3% growth rate last year. As a result of this development, India was promoted to lower middle-income country status in 2015 and met the UN requirements for graduation from the category of least developed countries in 2018. If the country wants to boost its foreign trade prospects, it must first and foremost develop its infrastructure (World Bank Group, 2018). For cross-country regression and GINI analysis, India's trade openness as a percentage of GDP is an important factor to take into account. As a result, data from 2010 to 2019 for India's trade openness are provided. There was a high of 48.11 openness in India in 2012 and a low of 35.3 openness in 2017: from 2010 and 2019, India's average level of openness was at roughly 40% While the proportion of the total of imports and exports that India has received over the previous decade hasn't reached 50%, this is still considered a significant improvement over other low-middle-income nation. Trade openness is seen in Figure 2 and Table 3 below.

2010 37.8 2011 47.42 2012 48.11 2013 46.3 2014 44.51 2015 42.09 2016 37.95 2017 35.3 2018 38.24 2019 36.76

International commerce has the potential to relieve poverty by improving both worker productivity and the distribution of income. International commerce, in particular exports, is expected to relieve poverty in both directions for a variety of reasons. To begin with, international commerce leads to efficiency benefits due to labor specialization and free exchange, as well as the availability of a wider range of commodities and services. Therefore, greater exports should lead to the development of jobs for unskilled labor, reducing poverty with the correct policy environment and distribution channels. As a result, not only is a country's economic well-being harmed, but the poor in emerging nations are also deprived of the benefits that increasing international commerce would provide them. Efficient macroeconomic policies may help to boost growth and alleviate poverty via international commerce, according to empirical evidence. An abundance of studies has shown the importance of international commerce in the elimination of poverty,

1. Ms. Madhavi Patkar “Role of International Trade in Eradicating Poverty” Volume 8, Issue 5, 2018 2. SheereenFauzel “Investigating the Impact of Trade on Poverty Reduction in a Small Island Economy” https://doi.org/10.1080/07360932.2020.1811746

4. Pepita Barlow et.al “COVID-19 and the collapse of global trade: building an effective public health response” Volume 5, Issue 2, E102-E107, February 01, 2021 5. Raj M.Desai et.al “Trade, poverty, and social protection in developing countries” Volume 60, December 2019, 101744 6. Geoffrey J. Bannister “International Trade and Poverty Alleviation” DOI:10.2139/ssrn.270440 7. R. C. Acharya and W. Keller, “Technology transfer through imports,” Can. J. Econ., 2009. 8. Harrison, Ann, “Trade and Industrial Policy: China in the 1990sto Today”, in The Oxford Companion to the Economics of China, edited by Shange Fan, Ravi Kanbur, Shang‐Jin Wei and Xiaobo Zhang, 2014. 9. Adao, Rodrigo, Arnaud Costinot, and Dave Donaldson. "Nonparametric counterfactual predictions in neoclassical models of international trade." American Economic Review107.3 (2017): 633‐89. 10. Hasan, R., D. Mitra, and B. P. Ural. “Trade liberalization, labor market institutions, and poverty reduction: Evidence from Indian states.” In: Bery, S., B. Bosworth, and A. Panagariya (eds) India Policy Forum 2006-07, Volume 3. London: Sage Publishing, 2007. Challenges. Cambridge, MA: MIT Press, Forthcoming. 12. Topalova, P. “Trade liberalization, poverty and inequality: Evidence from Indian districts.” In: Harrison, A. E. (ed.). Globalization and Poverty. Chicago, IL: University of Chicago Press, 2006; pp. 291–335. 13. Lim, Linda. 1990. „Women‟s Work in Export-Oriented Industries:The Politics of a Cause.‟ In Irene Tinker, ed., Persistent Inequalities: Women and World Development. New York: Oxford University Press. 14. Joekes, Susan. 1999. A Gender-Analytical Perspective on Trade and Sustainable Development.‟ In UNCTAD, Trade, Sustainable Development and Gender. New York and Geneva: UNCTAD. 15. Berg, A., & Krueger, A. (2003). Trade, growth and poverty: A selective survey. IMF Working Paper, 03/30. 16. Aktar, I., & Ozturk, L. (2009). Can unemployment be cured 17. by economic growth and foreign direct investment in 18. Turkey? International Research Journal of Finance and 19. Economics, 27, 203-211

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