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

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Is Import Liberalisation Hurting Domestic Industry and Employment?

Theory says that freer trade encourages economic activity and hence raises production and employment. Is this true in the Indian case? This article examines statistical evidence to answer this question. It finds that since liberalisation, trade has shrunk India's manufacturing base both in terms of value addition and employment. The intermediate and capital goods industries have suffered more. Manufacturing is also shifting from high-skilled and capital intensive production to low-skilled and labour intensive production. Existing wage disparity between skilled and unskilled workers has worsened.

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