Value Added Trade and Pro-Poor Growth in Agriculture and Manufacturing Sector – A Case Study of ASEAN and India

Globalization has generated large amounts of wealth in the world and raised the standard of living of the individuals in the last two decades. With goods no more being produced in a single country, a web of global value chains have generated. Hence gross exports of a country may not give the exact measure of a country‟s exports. Agriculture is the backbone of developing economies. Trend shows agricultural intermediate exports are more than exports of final goods. In order to understand India‟s real exports of agriculture and manufacturing sector with ASEAN, trade in value added is calculated. This paper then applies the general gravity model to analyze the export structure by using panel data estimation techniques. Although goods have become cheaper with plethora of options available for customers to buy in the globalized era, the continued presence of abject poverty marks a significant failure of the integrated economy of the world even today. The second part of the paper analyses if value added trade in only agriculture goods between India and ASEAN has any impact on poverty conditions in India. The results obtained state that India‟s exports are influenced to a great degree by common border, per capita differentials, and overall openness of the countries involved in trade. Poverty is found to be not linked with India‟s domestic exports, however, pro-poor growth could take place if governance improves, education level increases and inclusive growth is put to practice.