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After gaining its independence, India moved in a direction of high tariffs and protectionism. In 1990, the average tariff in India was about 80%, meaning higher

After gaining its independence, India moved in a direction of high tariffs and protectionism. In 1990, the average tariff in India was about 80%, meaning higher prices for consumers and less effective and efficient production of goods and services. But, in 1991, reform took hold and India opened their economy to global trade. Tariffs dropped from 80% in 1990 to 37% in 1996. How did gains from trade affect poverty? An increase in exports led to more jobs at home and an increase in real wages. While other reforms happened simultaneously, it is estimated that 38% of the reduction in poverty between 1987-2004 is due to trade.

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