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International Trade and Economic Development$
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Rajat Acharyya and Saibal Kar

Print publication date: 2014

Print ISBN-13: 9780199672851

Published to Oxford Scholarship Online: September 2014

DOI: 10.1093/acprof:oso/9780199672851.001.0001

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Trade, Poverty, and Readjustments

Trade, Poverty, and Readjustments

(p.170) 8 Trade, Poverty, and Readjustments
International Trade and Economic Development

Rajat Acharyya

Saibal Kar

Oxford University Press

Since trade reform and trade liberalization form important policy instruments in developing and transition countries across the world, a major concern in this literature is how trade affects the income distribution in unequal societies. This has opened up a new dimension in the subject of trade and development, where impact of trade on poverty captures the interests of a sizeable audience globally. This chapter shall try to identify the sources and transmissions of the gains from trade to segments of the population. The chapter offers a concise model of the relationship between trade liberalization, the size and variety of the informal sector characterizing the developing world, and the implications for the incidence of poverty. The chapter also develops a political economy model on how a poor country persists on the path of trade liberalization when the concerns about redistribution loom large.

Keywords:   trade, poverty, informal sector, inequality, adjustment assistance

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