Informal economy may cut poverty

The Daily Star, February 2, 2009
Empowerment of the poor, mainstreaming informal economy and developing the agricultural sector are keys to poverty reduction through trade in South Asia.

The observation came at a session of a seminar, chaired by Executive Director of the Centre for Policy Dialogue Professor Mustafizur Rahman.

The session, “Future Work on Globalisation and the Poor in South Asia”, is part of a two-day seminar organised by South Asian Network on Economic Modelling and CUTS International in Dhaka yesterday.

Trade experts, economists, development experts, academics and researchers from home and abroad took part in the seminar to share their experiences.

Saman Kelegama, executive director of the Colombo- based Institute of Policy Studies (IPS), said since the informal economy is playing a vital role in poverty reduction in South Asia, this economy should be nourished to elevate to the formal economy with different supports for employment generation and wage hike for poverty reduction. Kelegama said agricultural sector is still neglected in different ways, although this is the largest sector for employment in the region.

“Proper marketing methods of agricultural goods with institutional supports are needed,” he said. He also suggested that the South Asian trade should be linked with global trade through removing barriers like higher tariff for reducing poverty.

“This is a discrimination that a developing country has to pay the same amount of tariff like the developed countries in international trade,” the Lankan expert said. He said the developed countries should import unskilled workers along with skilled workers from developing countries under the GATS’ MODE-4 agreement.

Siddharta Mitra, director (Research), CUTS International, stressed removing all barriers to enhance trade. “We should expand trade through downsizing the tariff,” Mitra said.

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