Trade reforms in India ten years on: how has it fared compared to its East Asian neighbours?

Abstract

Introduction: ....This paper concentrates on the impact of India’s economic reforms in the 1990s on its international trade linkages with the rest of the world. The paper consists of five sections. The next section briefly summarises recent trade reforms in India and documents the extent to which the country has integrated with the global trading system. Section 3 goes on to analyse shifts in India’s export patterns over the past two decades and compares it to that of East Asia which has long been characterised as having followed a “flying geese pattern” (FGP) of production and trade. The FGP, due to Japanese economist Akamatsu Kaname (1962), has been used to describe the shifting pattern or spatial reorganisation of international production and comparative advantage across East Asian countries. Data limitations invariably limit focus of the empirical analysis in these two sections to merchandise trade. However, as part of India’s newfound global orientation, trade in services has taken on a key role, constituting over a quarter of India’s total exports in 1999/2000 (IMF, 2000 and Raipuria, 2001). Within the services sector, the Information and Communications Technologies (ICT) sector is of particular relevance. This sector is seen as a means of “leapfrogging” the stages of trade and development that is characteristic of the FGP pattern. Section 4 therefore discusses the role of the ICT sector in India which has been the bulwark of the country’s export growth. The final section provides a summary and some concluding remarks on the role of foreign direct investment (FDI) which is often viewed as an integral part of a successful outward-oriented growth strategy.