India's Reform of External Sector Policies and Future Multilateral Trade Negotiations
70 Pages Posted: 10 Jul 2001
Date Written: June 2001
I evaluate India's transition from an inward-oriented development strategy to greater participation in the world economy. While tariff rates have decreased significantly over the past decade, India is still one of the more autarkic countries. Despite improvement over the past in export performance, India continues to lag behind its South- and East Asian neighbors. Second, official debt flows have been largely replaced by foreign direct investment (FDI) and portfolio investment in the 1990s. India's ability to attract FDI would be greatly enhanced by further reforms. I argue that India's participation in a future round of multilateral trade negotiations would benefit India. I outline the further reforms most needed: reform of labour and bankruptcy laws, real privatization, and fiscal consolidation. These involve taking on entrenched vested interests, including political parties and governments in states. Enacting them requires political courage and risk taking which in India, as in most societies, are rare.
Keywords: India, Antidumping, Developing Countries, Economic Reform, Export Performance, Foreign Direct Investment, Intellectual Property Rights, Multilateral Trade Negotiations, Quantitative Restrictions, Real Exchange Rate, Tariff and Non-tariff Barriers, World Trade Organization
JEL Classification: F13, F14, F15, F21, F35, O34, O38
Suggested Citation: Suggested Citation