Question

How might market liberalization contribute to reducing poverty in developing economies?

Answer 1

I would like to comment on this based on both macro economic and micro economic factors:

Market liberalization means increasing the ease of access of doing business by influencing the resource allocation, free trade, easy of doing business for foreign companies, financial inclusion etc.

This could help the economy in the following ways:

1. Increased industries which help in increasing employement opportunities. As the ease of doing business help in increasing more number of industries which in turn helps the employement opportunities

2. Increased quality of life - as the internal competition helps in better quality of products in competitive prices which helps in getting access to various section of people

3. Increase of import goods - as the liberalization helps in foreign companies to enter Indian markets, the variety of goods which are unavailable in our country and which are premium before can be now accessible freely for lesser prices

4. Increase of industries lead to higher government income, which can help in financial progress of the country/state by planning financial programmes for the people below poverty line.

Do let me know, if you needed additional explanation on the same. Help me with an up vote if you like it. Thanks