4.

Intra-regional trade and exchange as a key strategy for

alleviating rural poverty
No society can surely be flourishing and happy of which by far the greater part of the numbers
are poor and miserable (Adam Smith 1976).
The empirical studies suggest that trade has a positive effect on employment and income for the
poor but there are always winners and losers. The persistent presence of poverty in Pakistan
signifies perhaps the utmost failure of its modern-day economy and the greatest challenge. But
the question which arises is whether the development of trade liberalization could have
contributed to poverty alleviation. Taking that into account, the government policies should focus
on intra-regional trade and SMEDA (small and medium enterprises development), particularly
efforts are needed to increase technology and increase efforts in increasing domestic exports
which can come in the form of subsidies that would create employment opportunities and help in
alleviating poverty. The aim of this paper is to study the effect of intra-regional trade reforms in
Pakistan on reducing poverty. It endeavors to answer the question that if the openness of intraregional trade has led to a reduction in poverty or not. The variables which can be used to be
measure poverty are Head Count Ratio, Income Gap Ratio. The other variables for better
understanding include balance of payments, economic growth, unemployment and volume of
regional trade.
Abdullah Majeed
BSC IV A
12U00052.
Lahore School of Economics.
The study is conducted to analyze the effect of intra-regional trade reforms in Pakistan on
reducing poverty. It endeavors to answer the question that whether the openness of intra-regional
trade has led to a reduction in poverty or not. For this, multiple regression technique has been
applied on time series data for the period of 35 years (1975-2009), using balance of payments,
economic growth, unemployment volume of regional trade, Head Count Ratio and Income Gap
Ratio as variables. The results of the empirical study indicate a positive effect of intra-regional
trade on employment and income for the poor. The persistent presence of poverty in Pakistan
signifies perhaps the utmost failure of its modern-day economy and is the greatest challenge.
However, in order to increase its economic growth the government policies should focus on
intra-regional trade and SMEDA (small and medium enterprises development), particularly
efforts are needed to induce technology and put in more efforts to increase domestic exports
which can come in the form of subsidies which would ultimately help Pakistan to create
employment opportunities and alleviate the prevailing poverty.