Export Optimism and Import Liberalisation

Export Optimism and Import Liberalisation Jayati Ghosh RECENTLY, Arguments that reject export pessimism and propound a macro-economic strategy which is based on a major aggressive thrust in export markets have become increasingly common in the Indian context. Bhagwati and Srinivasan (EPW; November 24, 1984) have reiterated their well known views that economic policies determined by ''unwarranted export pessimism" have been responsible in large part for India's hitherto unsatisfactory performance. They take issue with Chakravarty (EPW, May 19-26, 1984), who has argued that "at this stage India is unlikely to emerge as a leading actor on the export front". Bhagwati and Srinivasan, by contrast, see substantial export growth as a feasible basis for an Indian development strategy, given micro policies for export promotion and "very good macro policies". The latter arc implicitly seen to be similar to those of South Korea which has successfully restricted the growth of the product wage in industry and thus improved its competitiveness in world markets.1 The issue of export promotion is particularly relevant at the present time when Indian economic policies are undergoing a process of substantial reconsideration and revision. There are two ways of viewing the need for an export promotion strategy. The first, which is related to the general orientation of the growth strategy, is to see export markets as additional or alternative sources of demand which would counteract stagnation or recessionary tendencies in the home market. The second is to view-export growth primarily as a means of acquiring foreign exchange to finance increases in imports. Since these two have varying policy implications, it is necessary to consider each in turn.