Globalization, Trade Competitiveness, and Economic Development: Empirical Evidence From India

Globalization, Trade Competitiveness, and Economic Development: Empirical Evidence From India

Ramakrushna Panigrahi (International Management Institute, India)
DOI: 10.4018/978-1-5225-4831-7.ch015
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Abstract

Competitiveness has assumed centrality in the debate of globalization and economic growth. In a free market economic environment, economic efficiency assumes importance to fuel international business and economic growth. In a globalized contemporary economic environment, most countries have espoused economic development models based on Washington consensus to achieve faster growth during last three decades. In 1991, India had liberalized its economy to join the globalized world to reap the benefits of a free trade environment. From a very modest economic background, India has taken the center-stage of global economy due to its sustained economic growth rate and achievements in economic development indicators in the post liberalization era. In its perusal of economic growth, India has achieved significant economic progress based on competitiveness and economic efficiency. This paper attempts to analyze the challenges of sustaining trade competitiveness and economic growth from Indian perspective in the wake of renewed concerns on sustainability issues in a competitive globalized environment.
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Introduction

In the contemporary globalized scenario, trade competitiveness has been crucial in determination of international trade relations. Soon after India joined the global economy in the early 1990’s, as part of its liberalization initiatives, excessive protectionist import duty structures were done away with to facilitate faster bi-lateral and multilateral trade relationship with rest of the world. Due to such measures, India has achieved very high growth rates in most economic indicators during last two decades. The exceptional economic progress by India despite its rich cultural diversity has been phenomenal. Though many economists attribute such high growth rates to poor base of India’s GDP in the 1980’s, the economic performance has been commendable which has brought India to the center stage of global economy. In its quest for faster economic development, since independence, India has gone experimenting with various economic models, which focus on export-led growth. However, a late entrant to join the globalization trend as compared to its Asian peers, India has made significant inroads in exports of services and gained hugely from the trade due to its inherent cost-competitiveness, which has contributed to its sustained high growth rates. This paper examines the challenges of sustaining high exports growth in a fast changing trade scenario and India’s relative position in cost competitiveness among its peers in the wake of sustainability concerns in an increasingly connected global economy.

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