In the current context of heightened concern for inclusive development, this article explores the link between trade liberalization and inclusive growth by analyzing the channels by which trade liberalization-induced structural change and employment patterns influence growth, inequality and poverty. Drawing from the empirical evidence from India, it is observed that trade-induced structural change has been associated with jobless growth and growing wage inequality. Hence, higher growth has not been inclusive, as it has not resulted in commensurate decline in poverty while inequality increased. To the extent that the nature of trade induced structural change is governed by the prevailing systems of innovation, the article calls for building and strengthening the learning, innovation and competence building systems at the national, regional and sectoral level such that growth becomes inclusive and human capabilities and freedoms are expanded.
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