Does Trade Liberalization Promote Regional Disparities? Evidence from a Multiregional CGE Model of India

• DOI: 10.1016/j.worlddev.2014.06.001
• Publication Date: 2014-07-12T03:45:18Z
• Authors: Athula Naranpanawa; Rashmi Arora
• Keywords: Trade liberalization; Economic growth; Regional disparities; Computable General Equilibrium model; South Asia; India; Economics; 05 social sciences; 1. No poverty; Other human society not elsewhere classified; India; Human society; Computable General Equilibrium model; Trade liberalization; South Asia; Regional disparities; 8. Economic growth; 0502 economics and business; Economic growth

Summary Over last few decades, there has been a growing interest among researchers in understanding the link between trade liberalization and regional disparities within the context of an individual country. In this study, we develop the first ever single-country multiregional Computable General Equilibrium (CGE) model for the Indian economy to investigate this linkage. Overall our results suggest that, in the short run, trade liberalization has a beneficial impact on the rich and fast-growing middle-income states and a marginal or negative impact on the poor states.