Regional Trade Openness Index and Income Disparity - A New Methodology and the Indian Experiment

Economic and Political Weekly, pp. 757-769, March 3, 2007

38 Pages Posted: 16 Jan 2008

See all articles by Sugata Marjit

Sugata Marjit

Centre for Studies in Social Sciences, Calcutta; City University of Hong Kong (CityUHK) - Department of Economics & Finance

Saibal Kar

Centre for Studies in Social Sciences, Calcutta; Institute of Labor Economics (IZA)

Dibyendu Maiti

Indian Institute of Engineering Science and Technology, Shibpur

Abstract

This study tries to look at how 'open' Indian states are with respect to international trade and then try to characterise the relationship between regional disparity and 'openness'. The major purpose of this work is to develop an openness index at the regional or state level. It is well recognised that international trade data are not easily available at the sub-national level. This is particularly a problem for countries that are large in size and have diverse heterogeneous regions. The methodology developed here is not only applicable to the Indian case but also for many such countries where state level trade data are not available. We try to devise a proxy, which allows us to rank states over time in terms of their exposure to trade. This index changes over time on a year-to-year basis and therefore is amenable to time series analytics. It is observed that the relative income of a region is closely related to the extent of openness and that such relationship gets stronger over time. We have evidence that openness is strongly correlated with rising income disparity across regions.

Keywords: Trade, Regional Openness Index, Income disparity

JEL Classification: F14, R12

Suggested Citation

Marjit, Sugata and Kar, Saibal and Maiti, Dibyendu, Regional Trade Openness Index and Income Disparity - A New Methodology and the Indian Experiment. Economic and Political Weekly, pp. 757-769, March 3, 2007. Available at SSRN: https://ssrn.com/abstract=1084409

Sugata Marjit

Centre for Studies in Social Sciences, Calcutta ( email )

R 1, B.P. Township
Kolkata, West Bengal, India
Kolkata, West Bengal 700094
India

City University of Hong Kong (CityUHK) - Department of Economics & Finance ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

Saibal Kar (Contact Author)

Centre for Studies in Social Sciences, Calcutta ( email )

R-1, Baishnabghata Patuli Township
Calcutta, 700 094
India
91-33-2462 7252 (Phone)
91-33-2462 6183 (Fax)

HOME PAGE: http://www.cssscal.org

Institute of Labor Economics (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Dibyendu Maiti

Indian Institute of Engineering Science and Technology, Shibpur ( email )

P.O. - Botanic Garden, Howrah
West Bengal, 711103
India

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