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Paradigm Shift from Closed Economy to Open Economy in the Nineties:The Case of India


Overviews

If we take the example of India we will find India underwent a transition from a closed economy model to an open economy model in the nineties and revised its external policy from an import substitution to an export promotional strategy.


Key Points ● A reflection of a deep feeling of dissatisfaction regarding the attitude towards export promotion of the country until the late fifties was verbally opposed by Dr Manmohan Singh a bright economist and a renowned scholar of Cambridge in the introduction of his most celebrated work titled “Indian Export Trends” published in the year 1964. ● He argued that the stagnation of export was a consequence of faulty India’s economic policies and attributed this neglect of exports to two basic factors. First is the fatalistic view that export earnings cannot be raised and the next is the faulty assurance of some of the responsible economists that import substitution is the only resort to solve India’s existing problems. ● The allowing of foreign investment into the country both as FDI (Foreign Direct Investment) and FII (Foreign Institutional Investment) not only helped the country to increase Foreign Exchange Reserves but also provided an increase in the capital stock, in the expansion of production capacities, generation of employment opportunities and bringing in superior technology and management practices which was hitherto not available to the country. ● On the export front the radical effect came from the change in the basket of commodities that is exported. One of the reasons of India’s dwindling export was due to the fact that India’s export was not remunerative enough because India was basically a primary product exporting country.


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Paradigm Shift from Closed Economy to Open Economy in the Nineties:The Case of India  

If we take the example of India we will find India underwent a transition from a closed economy model to an open economy model in the nineti...

Paradigm Shift from Closed Economy to Open Economy in the Nineties:The Case of India  

If we take the example of India we will find India underwent a transition from a closed economy model to an open economy model in the nineti...

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