ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Regional Trade Openness Index and Income Disparity

This study tries to look at how "open" Indian states are with respect to international trade and then tries to characterise the relationship between regional disparity and openness. The major objective is to develop an openness index at the regional/state level. The methodology developed here is not only applicable to the Indian case but also for many countries where state-level trade data are not available. The paper tries to devise a proxy which ranks states over time in terms of their exposure to trade. It is observed that the relative income of a region is closely related to the extent of openness and that such a relationship gets stronger over time. There is evidence that openness is strongly correlated with rising income disparity across regions.

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