Policy Papers ⁽³⁶⁾

Read paper The paper offers a comprehensive review of the history of opening of the trade and foreign investment regimes by India and China beginning in the late 1970s. It also compares the performance of the external sectors of the two countries. A key conclusion is that the two countries are so far in different leagues in so far as the performance of the external sector is concerned. Journalists, economists and policy analysts are justifiably impressed with the phenomenal success of the Indian IT sector. But even this performance fades in comparison to several of the leading exports of China. I show that in terms of policies, India is almost as open as China but the response to its opening up has been far more muted. I trace this muted response to the domestic policy regime, which has hampered the growth of the unskilled-labor-intensive industry in India. I conclude that two key reforms--power and labor market flexibility--are essential if India is to become a major force in the world markets.

Read paper Compared with the average rate of growth of 6 percent per annum since the late 1980s, India has been growing at 8 percent per annum in the last three years. Is this a shift in the trend growth rate or an unusually strong upswing in the business cycle? Much of the evidence points to the former as the answer. Assuming this to be the case, India still faces an enormous challenge of transformation with 77 percent of the workforce in the rural areas, 59 percent engaged in farming. A unique feature of India's growth has been virtually no increase in the share of manufacturing in the GDP since 1991. fast growing sectors in India remain either capital intensive or skilled-labor intensive. If India is to transform itself from a primarily rural, farm economy to a modern one, it must bring about policy changes necessary for the growth of the unskilled-labor-intensive industry. This requires, most importantly, the reform of labor laws and building of infrastructure, especially power.

Read paper Longer version of the article published in the Foreign Affairs, special issue entitled Free Trade? in December 4002. The article shows that the trade distorting subsidies have substantially declined in recent years and that a mutually beneficial agreement is within the reach of the negotiating countries.

Read paper Published in Foreign Policy (September/October 2005). I critically examine the case against liberalization by developing countries made by many NGOs and some trade skeptics and argue why they do no favor to these countries.

Read paper Today, agriculture remains the most distorted sector of the world economy. Therefore, agricultural liberalization in the Doha negotiations is rightly the top priority. Because many of the potential exporters of agricultural products happen to be developing countries and many potential importers developed countries, liberalization in this area has an obvious North-South dimension. But beyond this simple generalization, the public-policy discourse remains fogged by a number of fallacies that have been embraced by the leadership of the World Bank, IMF, OECD, Oxfam and the leading academic critics of globalization alike. This paper identifies six such fallacies and offers evidence and analysis to debunk them: (1) Agricultural border protection and subsidies are largely a developed-country phenomenon. (2) Developed-country agricultural subsidies and protection hurt the poorest developing countries most. (3) Developed-country subsidies and protection hurt the poor, rural households in the poorest countries. (4) Developed-country agricultural protection and subsidies constitute the principal barrier to the development of the poorest developing countries. (5) Agricultural protection reflects double standard and hypocrisy on the part of the developed countries. (6) What the donor countries…