Saudi Journal of Economics and Finance (SJEF)
Volume-8 | Issue-12 | 465-473
Original Research Article
Trade Openness and Poverty in India: A Time Series Analysis
Deepakshi Sharma, Qamar Alam
Published : Dec. 31, 2024
Abstract
This research investigates the empirical linkage between trade openness and poverty in India through a comprehensive three-stage model approach. In first stage descriptive statistics, correlation matrix analysis and unit root tests are used to analyse the characteristics, nature and stationarity of the selected variables. Further, in the study Autoregressive Distributed Lag (ARDL) co-integration model to explore both long-run and short-run relationships between trade openness and poverty. Some post estimation test including the Breusch-Godfrey LM test, White heteroskedasticity test, and the Ramsey RESET test in the last stage. The empirical findings of the study show that there is positive correlation between trade openness and poverty (HDI). In the long run, trade openness, foreign direct investment (FDI), and exchange rate have significant impacts on poverty reduction, while inflation rate and GDP per capita exhibit mixed effects. Impact of FDI and Trade Openness (TO) is positive on poverty reduction, while exchange rate, inflation rate, and GDP per capita show varying impact on poverty. The study suggests that policymakers should consider fostering trade openness and addressing other economic factors to effectively reduce poverty in the country.