Trade to economic growth and poverty reduction

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Economic growth is regarded as the most significant factor for the reduction of poverty. The reduction process of poverty is depend upon the rate and growth of economic trade , growth tends to give better opportunities for the employment and made the contribution to the reduction of poverty. In addition there is chance to grow the accord about the healthy relationship between directness to economic performance and trade. In the developing countries there is lack of domestic market and this market require expansion via international trade in both way i.e. globally and regionally. Also the trade act as provider for the transformation of the technologies from the different parts of the world and also tell that how can be done. This in result help to improve the domestic productivity and due to increase in the domestic productivity there will be increase in the level of competition. These domestic industries become more active to the existing environment. One thing should be keep in mind that the effect of trade over the reduction of poverty depends upon the various aspects and these effects can be positive, negative and they may be neutral. In the past year there was discussion about trade and its effect over the economic growth and poverty reduction i.e. study of the impact of the liberalisation of the trade over the reduction project of poverty. In this course work there is focus over the contribution and the consequence effects of trade on the economic growth and poverty reduction. As the trade contributes a lot to economical growth and both have strong relationship. The benefits from trade to economy are different in the different countries. The objective of the trade is growth which is sustainable by adopting the fare policies and mainly to reduce poverty.


"For many people economic poverty is rooted in their inability to trade - and trade is a vital route out of poverty" (Trade Matter DIFD, 2005)

For the reduction of poesy the economic growth is regarded as the most powerful fool. This is fact that for a counts up to develop it economy effectively depends upon their relationship with the international trade and on the foreign investments .The countries with good economic grouts done same with international trade and get the benefit from the open markets of would. As we look at the trade expansion it is not necessary to get the expected benefit from the liberation of the trade. The international community trying to improve reform the aid for the development of trade in other to help the countries which are developing and even those which are very low at the development level.

Is new tool of aid to trade has designed for the interlocking of the various policies of trade which are rational raked strategies to improve the living standards and to reduce the pouty. This tool has to be used as to get the proper benefits from the policies of trade. It can also be used as tool to handle the destruction of those countries which are not able to expand themselves with the competitive market incenses when these is mere output from the economy side ,there are opportunities to orate more foals and poor can get help from that jobs. The contribution of trade to the poor are depend on the consumption of the poor that throw they take this opportunity positively and to which extent.


This is crystal clear that the trade is an important booster for the wealth of the generation. This is also regarded as the means of productivity and to lower the poverty. For the long lasting economic growth there is concept to access the large market of the Domestic Foreign Trade (DFT). Which are the keys for to make the domestic market to generate the demand levels which in turn use the economies of scale. Furthermore the trade permitted those countries which are developing to use the things regarding the technologies which are necessary fro the recuperating their production and economic growth. This further helps to generate the job opportunities for the poor people including men as well as the women. In Asia there is establishment of new industrialised economies starting from the 1960 and up to 1990. In that case the those countries which came forward later to take the benefit from them can take the advantages from the advance and new technologies and even they can buy those technologies at the lower prices and with the minimise risk (Lin et al, 2007 and UNIDO, 2007).

For the earning of sufficient foreign exchange the exporters at the global level play an important role in this is for finance the impor of capital. The completion is always driue the growth of productivity of an enterprises. According to the (bigton etal,2004)the trade by the efficiency of gains from the enporting results to imprve the productivity. This resalts in the nose efficiency and benefit for. the poorey lowring the price. There must be a balace between the portand import otherwise there will be dangerour of debt from enternal sowrces which will effect and decrease the grouth of economeg(mcculloch,cirera and winter,2001).from the year 1980 there is dramatic expansion of goods and seruices in the global market in relation to word trade which grow 5 times and the price of shares of world GDP raised from 36%to55% ill that period of time(IMF 2007). By lowering the barriers to the trade there is acceleration in 1990sand fast growth in the Asia, especially in China and India. According to the facts these type of growth are not seen in all countries who are developing. In addition both the low and middle level countries covered through the considerable growth by breaking their barriers to the trade in the last twenty years. According to (The World Bank 2007) the variation in the results is the main cause that why there is no compromise in the trade liberalisations impact quantitatively in the literature. For the most part of the practical examine leads to the failure for the maintaining the healthy relationship among them.

Relationship between Economic Growth, Productive Capacities and Poverty Reduction

8. Global approaches - local solutions

51. Trade opportunities and constraints faced by countries depend on initial conditions that have been shaped by history, endowments, administrative capabilities, and a host of other factors. As such, designing pro-poor trade strategies is dependent on identifying a selective and sequential approach that accounts for country-specific circumstances. How trade openness affects poverty in any individual country depends on the country‟s specific circumstances, including its geographical position and on the situation of its poor citizens. Trade openness needs to be broad based across sectors and regions and inclusive of the large part of the work force that poor men and women make up. Clearly, this calls for the need for „localised‟ solutions that are tailored to specific national priorities and contexts, including the kinds of complementary policies that can be adopted along with trade reform to ensure greater gains for the poor.

52. A study by CUTS International (2008) on trade-development-poverty linkages concludes that the most significant feature is that the same set of policies produces dramatically different results in the different country case studies. It identifies that the differing outcomes are due to: varying physical and geographical characteristics of the countries; the nature of the implementation of these policy measures; the capacity and quality of institutions under which the reforms are implemented; and the political and social environment. The complex interaction of policy reforms and the country‟s existing structural attributes determine the overall outcomes that are beyond the predictions of simplified theoretical constructs (CUTS, 2008). 23

53. It is widely recognised today that a „one-size-fits-all‟ approach is not conducive to development and will eventually fail to deliver results. While the ingredients are common across different growth experiences, the recipes need to be very country specific. But it is also important to note that successful cases of trade expansion have done so under regimes that did not disadvantage export industries and by following the comparative advantages in their economic development (Michalopoulos, 2003; Lin, 2007).

9. Conclusions

Trade is regarded as the main part of the economic growth and poverty reduction programme. The main objective of the trade liberalisation is to maintain the standards of living and to minimise the poverty mainly in the developing countries. In the achievement of continue economic growth integration of trade is regarded as the substantial element. This fact is acknowledge by the by the most of the development community and they also added that by increasing the impact of trade the poverty can be reduced to much extent. For providing an important structure for supporting the process of poverty reduction the Aid of Trade is provided by extending the markets globally and regionally. For having the good balance between the growth and trade in order to get the long lasting benefits it is mandatory to have a close look and serious attention towards the various effects of trade on the various groups from the views of gender having men and women poor people, geographical conditions for the poor people related to the urban or rural areas and the employment. From the concept of export oriented trade policy involvement it has to be observe that whether they have great effect over the pro poor and there is need to consider the data related to the poor and to look at the roles they can play as the consumers , producers and the workers. There are questions like : where the poor live ? What is mans of their livelihoods? What will encourage them to participate in the growth process? Are for the policy makers to ask and answer those questions?

Trade is not regarded as the only solution for the development of the economy. It depend upon the level of the country that what kind of improvements they need like if they could require the human capital investment ( for example in the areas of health , education and food ), rural development and aids for the farmers in the agriculture development and the promotion of the stability of the Macroeconomic. These kind of policies contributes to the reduction of openness of the poor, this is useful for them to gain the benefits from the opportunities from the future market. It is concluded that the policy maker has to design and implement that strategy for the development which involve the benefits as well as to minimise the negative aspects of the globalisation of the trade.