The Role of International Trade in Poverty

Analyzing the Impact of International Trade on Poverty Reduction in India

Abstract

There is a strong correlation between GINI indices in India and the country's trade opennessand GDP per capita, unlike inflation rates, which do not. Trade openness and GDP per capita were shownto have substantial effects on the poverty gap in India but inflation rates had no effect on it when data wasgathered from secondary sources using a multi-case study research technique and the conventionalcross-country regression analysis model. The only statistically significant correlation between GDP PerCapita and poverty incidence is that of openness to trade and inflation rates. According to conventionalwisdom, more exports lead to an increase in GDP, although this is not always the case. There is alsoevidence of this theoretical uncertainty in the empirical literature examined. This research explores howchanges in India's export performance affect poverty rates in order to clear up this uncertainty. A broadvariety of macroeconomic factors are analyzed in order to determine the influence of foreign trade onpoverty reduction in India.