Effects of International Trade on Poverty in India Research Paper

Effects of International Trade on Poverty in India - Research Paper Example India has a population of more than 40% who spend less than this amount a day and have one of the lowest per capita incomes when compared to other countries in the region (Almas, Kjelsrud & Somanathan, 2013). Statistics from the national sample survey from 1973-2002 indicate the changing trends of poverty in the country and the population section that have been most affected by poverty in the country. The 1973 census indicated that out of the total population, 54.9% was leaving way below the poverty line. The poverty index increased from this year to 1990s as a resulting of the surging population growth which was not supported by a concurrent economic growth in the country. In the 1990s, the poverty trend worsened with a high percentage of up to 320 million Indians classified as being poor and requiring support from the government. During this era, the significant pace of decline in poverty decreased from an impressive 6% to 2.9%, attributed to the significant increase in population. The financial crisis of 1991 was also blamed for this increase in poverty index in the country (Almas, Kjelsrud & Somanathan, 2013). International trade and poverty With the current surge in globalization and cooperation between countries, international trade has grown significantly between countries including India. International trade is defined as the exchange of goods, services, ideas and technological knowledge between countries geographically separated. The growth in international trade has led to significant growth in demand and supply in different sections of the world, thus spurring growth and elimination of poverty. Through this exposure, countries develop new ways of production, transportation, trading approaches and technological ways of production, which increases its gross domestic product. An increase in the gross domestic income of a country results into increase in the country’s per capita income, which significantly translates to an increase in the living s tandards on the people. International trade also opens up more opportunities for countries to market their products beyond their borders resulting into increased exports and imports (Topalova, 2010). India has advanced significantly in the arena of international trade and today contributes to a significant ratio of the world’s total exports both of goods, services and new technological ideas. The advances in international trade in the country began in 1991 when the country liberalized its market, thus opening up for international imports and exports. This has increased foreign investments in the country and opens it up for new ideas, means of production and techniques (Hasan, Cain & Mitra, 2010). International trade thus have a significant role in reducing poverty in any country as it opens it up and increases its overall trade volume. This increases the gross domestic product of the country which translates into an increased per capita income. A country with a higher per cap ita income has a decreased poverty level for each member of the population contributes in a significant ratio to the overall growth of the country. But how has international trade impacted on the poverty level in India and how has it narrowed the total population that leaves below the poverty line? In this paper, the impact of international trade in reducing the devastating effects of poverty will be evaluated. Through this evaluation, the strengths and