Regional Trade Openness Index, Income Disparity and Poverty - An Experiment with Indian Data

This study aims to examine how ‘open’ Indian states are with respect to international trade and uses the index of regional openness thus constructed to reflect on several aspects that affect the level of poverty in India, directly and indirectly. The construction of the present regional openness index within the geographic boundaries of a nation state is novel in the economic literature, and applications of this index in the Indian context provides new insights into several issues in growth and development, which has not been attempted so far. The study dwells upon the evidence starting from 1980s, leaving ample ground for any relevant comparison between the pre- and post-reform years. The unifying thread between the first two issues, other than the openness index acting as a facilitator for all three, is the industrial classifications of different commodities produced in India and the changes at the industrial level – both in terms of output and employment. The methodology developed for this study is fairly general and may find similar applications in countries other than India.