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Title: DOES VALUE-ADDED TRADE REDUCE POVERTY? - AN EMPIRICAL STUDY OF ASEAN AND BRICS COUNTRIES
Authors: Ms. Vandita Mishra, Dr. Mahua Bhattacharjee
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1Ms. Vandita Mishra, 2Dr. Mahua Bhattacharjee 1. PhD Scholar, Amity University, Sector 125, Noida, 201305, U.P., India 2. Associate Professor, Amity University, Sector 125, Noida, 201305, U.P India
MLA 8 Mishra, Ms. Vandita, and Dr. Mahua Bhattacharjee. "DOES VALUE-ADDED TRADE REDUCE POVERTY? - AN EMPIRICAL STUDY OF ASEAN AND BRICS COUNTRIES." Int. j. of Social Science and Economic Research, vol. 3, no. 11, Nov. 2018, pp. 6016-6028, ijsser.org/more2018.php?id=419. Accessed Nov. 2018. APA Mishra, M., & Bhattacharjee, D. (2018, November). DOES VALUE-ADDED TRADE REDUCE POVERTY? - AN EMPIRICAL STUDY OF ASEAN AND BRICS COUNTRIES. Int. j. of Social Science and Economic Research, 3(11), 6016-6028. Retrieved from ijsser.org/more2018.php?id=419 Chicago Mishra, Ms. Vandita, and Dr. Mahua Bhattacharjee. "DOES VALUE-ADDED TRADE REDUCE POVERTY? - AN EMPIRICAL STUDY OF ASEAN AND BRICS COUNTRIES." Int. j. of Social Science and Economic Research 3, no. 11 (November 2018), 6016-6028. Accessed November, 2018. ijsser.org/more2018.php?id=419.
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Abstract: This paper attempts to examine the extent to which trade and poverty in developing countries are linked. Globalization or the extent of a country's international integration, requires trade to be measured in terms of trade in value added to capture the amount of value, a country adds to its production for exports. Although trade is being used as a tool for development strategies, theoretically the impact of trade on poverty reduction is ambiguous. According to StolperSamuelson theorem, the abundant factor tends to gain from trade openness. Hence in developing countries labour being the abundant factor, the poor should directly gain from trade. However, the obvious theoretical impact of trade openness seems to be of ambiguous nature in the empirical literature. Seeking to resolve the ambiguity, this paper examines trade-poverty relationships based on certain country characteristics. The paper uses GMM methodology to perform a cross sectional study for the ASEAN and BRICS nations over the time period 1995- 2011. Testing for linearities and non-linearities, it is found that there is no direct relationship between trade openness and poverty, however trade openness reduces poverty in countries where governance is strong, financial sectors are deep and education levels are above average.

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