Integrating India With the World Economy: Progress, Problems and Prospects
نویسنده
چکیده
India was largely insulated from the world trading system for more than four decades after independence in 1947. Pursuit of an inward-oriented development strategy, rationalized both by a wary, almost hostile, attitude towards foreign trade, technology and investment, and by pessimism about export markets, inevitably led to India becoming marginalized in world trade. During the period of rapid growth in world exports at nearly 8% per year on an average during 1951-73 before the first oil shock, India's exports grew at a much slower rate of 2.66% per year and the ratio of exports to GDP declined from 7% in 1951-1952 to around 4% in the early seventies (Srinivasan and Tendulkar, (2001), Ch. 2). Again when private capital flows to developing countries grew phenomenally since the mid-eighties, India was not one of the favored destinations for private foreign investors. After the collapse of the Bretton Woods system of fixed exchange rates in 1971, Indian exchange rate policies achieved significant depreciation of the rupee for sometime against major currencies as the latter floated against each other. The depreciation, coupled with deliberate export promotion (or at least reduction of bias against exports), led to Indian exports to grow faster on an average than world exports (in volume) since 1973. Still in value terms, India's share in world merchandise exports, which stood at 2. The origins of the severe macroeconomic and balance of payments crisis of 1991 and the institution of systemic economic reforms that followed, have been analyzed by several authors (see Srinivasan and Tendulkar, 2001, for a recent analysis). I will not go over this ground again, except to note that, among the initial set of reforms was liberalization of international trade and,
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