From Export Pessimism to Global Integration

International trade and investments that enhance allocative efficiency and economies of specialisation are important drivers of growth. It leads to investment and technology flows and also generates employment. Post independence, India through its indicative planning might have underplayed ­export growth and relied more on import substitution. This eventually led to resource misallocation, inefficiency, and rent-seeking, and the export pessimism was used as an opportunity for thriving on the basis of protected markets. The central thesis of Murali Patibandla’s book Interna­tional Trade and Investment Behaviour of Firms is that export propensities of firms show a non-linear relationship with size and that the change in policy regime, particularly that of invoking liberalisation policies, has enhanced competitiveness and x-efficiency of firms.

In the context of the post-liberalisation phase, the book persuasively argues that engaging with transnational corporations (TNCs) subject to macro conditions, such as protection of property rights, potential markets, and availability of requisite skills helped enhancing technological and org­a­nisational heterogeneity and stimulated investment in technology. It entails a micro-­theoretic framework analysing the principal hypotheses of export behaviour of firms drawn from a detailed analysis of firm behaviour by size category of firms in dirigisme. In the context of a liberalised regime, the ­author shows a significant change in export propensity and technical efficiency of large-sized firms.