ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Deepak KapurSubscribe to Deepak Kapur

Economic Reforms and Trade Performance

Since 1991-92, India has undertaken widespread policy reforms in order to integrate its economy with the rest of the world. In this fact-finding study, the balance-sheet data of 557 private sector companies are considered with several ratios and indicators of performance and trade behaviour. The companies are divided into exporting and non-exporting groups. On the whole, exporting companies are found to be performing much better than non-exporting ones. The policy reforms have, however, helped the latter to improve their margins, though they have been pushed to the lower end of the domestic markets.

Import Substitution with Free Trade

The import substitution policies in India, directly and indirectly, were responsible for 'islands of competitiveness' such as the software industry and also the general non-competitiveness of a large number of industries. They created certain supply side conditions that facilitated the birth of software industry as a by-product. Free trade with technologically advanced economies, especially with the US, from the initial stages of its birth provided scope for realisation of technological and informational externalities. The main lesson we can draw from the dynamics of this industry is that a combination of supply side policy support with trade-openness contributes to the creation and technological maturity of hi-tech industries in developing economies.
Back to Top