Trade liberalization and its implications for poverty alleviation: A case-study of India and Bangladesh

This thesis first examines the macroeconomic, poverty, and labor-market characteristics of India and Bangladesh. Given this background, the thesis will then examine the more topical issue of trade liberalization and its relationship to poverty in these countries. The analytical framework will argue that there are two major channels through which trade can influence poverty. First, trade liberalization can lead to poverty alleviation by stimulating the exports of goods produced by the poor. This would lead to an increase in the relative and real wages of the poor. The second premise of the argument argues that even if trade liberalization does not directly favor the products made by the poor, as long as it can stimulate economic/productivity growth and generate positive externalities for the economy, poverty may be reduced marginally in the short-medium term. The overall thesis is that although there remains much work to be done in terms of stimulating agricultural exports to the same level that is characteristic of manufactures, the trade liberalization process in India and Bangladesh can contribute towards poverty alleviation by supporting economic growth. (Abstract shortened by UMI.)...