Sri Lanka meeting mulls trade-poverty nexus

May 28, 2008 (LBO) – Trade liberalisation may not necessarily lead to economic growth and lower poverty, with state intervention in recent financial crises showing the market may not have all the answers, a meeting of South Asian policy makers was told. This leads to growth which in turns results in poverty reduction.

But it can also be argued that trade liberalisation does not promote growth, not even expand trade, or that growth does not reduce poverty and that even if it did, it may not mean there is a causal relationship between the two phenomena, he added.

South east Asia has seen fast rates of growth and made impressive progress in poverty reduction.

But “while the proportion of poor in the population has come down, there has been no decline in absolute poverty,” Dubey said.

Most of the poor in south Asia is found in rural areas.

In Nepal, trade liberalisation led to a fall in urban poverty but an increase in rural poverty as well as income inequality, Dubey said.

Economic liberalisation also had negative effects on India’s agriculture and social sectors like health and education.

“Under the influence of liberal policies, agriculture suffered prolonged neglect and there were severe cut backs in spending on pu