AN EMPIRICAL INVESTIGATION OF CAUSAL NEXUS AMONG GROWTH, TRADE, INEQULITY AND POVERTY Dr. A. Gopalakrishnan * S. Pushparaj ** Poverty reduction has been one of the Millennium Development Goals (MDG) in all developing countries with very few exceptions. Generally, increasing trade in goods and finance is
considered as an engine of accelerating the growth of economy. Further, countries do believe that trade promotes economy through spillover effects and in turn the trade-led growth could facilitate poverty reduction. In a related development globalised era, economies have become closer than ever before. There has been a constant effort to forge the economies and trade relations stronger and deeper. Countries began to rethink about the strategy of economic isolation or import substituting policies in their pursuit towards achieving the developmental goals. Nevertheless evidence indicates that this changing global economic scenario has contributed little to change the poverty scenario in the developing countries. Poverty still remains an unresolved and potential problem that requires a suitable strategy for its reduction. There has been a serious thought about the components and the stress that suppose to be the given in the competing elements in the appropriate poverty-reducing strategy. Trade led growth is proposed as effective strategy to fight the plaguing poverty in developing countries. Further, the benefit of growth should be equally distributed as to make the poverty reduction possible through reduction of inequalities. At another level, growth, either trade led or not, need not always be linked to poverty reductions. Poverty – its level and intensity – could not be directly linked to the economic growth until the people yet considered as peripherals are ensured with perpetual flow of fruits of growth. Ravallion and Chen (2003) had strongly observed that growth is considered to be pro-poor if and only if poor benefit in absolute terms. Hence, a sustaining...