Trade Openness, Malnourishment and Income Inequality in South Asia

The paper empirically examines the effects of trade liberalization on undernourishment and income inequality in South Asian countries (SACS). For empirical analysis data is collected for the period 1972-2013 for five South Asian countries which include Bangladesh, India, Nepal, Pakistan and Sri Lanka. Panel fixed effect technique is used to estimate the model. The estimated results reveal that undernourishment has decreased while income inequality has increased in the region after liberalization. Economic development has reduced both undernourishment and income inequality. The results also endorse the role of agriculture factors in reducing undernourishment and the role of education, urban bias, and political democratization in reducing income inequality in SACS. These results are robust to alternative equation specifications and openness measures. The results provide some important policy implications. It is suggested that South Asian countries have to cope with the problem of malnourishment with high agriculture development and economic growth.