Growth, Poverty and Openness; An Analysis in South Asian Perspective

This Paper assesses the relationship of economic growth and poverty with openness in South Asian region in the light of the basic objectives of WTO (World Trade Organization) which states that openness of trade raises the living standard along with full employment and growing volume of real income. For the purpose seven South Asian countries namely Pakistan, Bangladesh, India, Sri Lanka, Maldives, Nepal and Bhutan are selected in this study. Study period of 53 years has been divided into pre and post liberalization, i.e. 1960-1980 and 1981-2012 to compare this relationship of economic growth and poverty with openness during both periods not only in the region generally but specify the share of individual country in this relationship also. Two options of Fixed effect model are utilized for the purpose. The “slope coefficient constant and intercept varies” and “all coefficients vary across individual cross sectional units”. Results show a significantly positive impact of openness over economic growth andpoverty of the region generally and specifically signifies the share of Maldives inaffecting growth and of India in affecting poverty as compared to other countries of the region. Gini (income inequality) worsens average income growth and poverty situation and specifically highlights the role of Sri Lanka and Nepal in this context in the region. Unemployment lowers growth and raises poverty of the South Asian region as theory states but Pakistan and Nepal have relatively greater shares in worsening this situation of growth and poverty respectively. During both period economic growth shows a positive impact over poverty and specially during post 80 period when its share is improved in affecting poverty of the region. Here Sri Lanka has relatively more effective role than other countries of the region