Trade Policy Inequality Trade Policy Inequality Trade Policy, - PowerPoint PPT Presentation

Trade Policy Inequality Trade Policy Inequality Trade Policy, Inequality Trade Policy, Inequality and Performance in and Performance in Indian Manufacturing Indian Manufacturing Kunal Sen Kunal Sen IDPM, University of Manchester IDPM, University of Manchester

� Presentation based on my book of the same � Presentation based on my book of the same Presentation based on my book of the same Presentation based on my book of the same title, Routledge, title, Routledge, September 2008: 234x156: 198pp Hb: 978-0-415-41335-0 198pp, Hb: 978 0 415 41335 0.

DOES TRADE REFORMS LEAD TO DOES TRADE REFORMS LEAD TO BETTER EFFICIENCY OUTCOMES? BETTER EFFICIENCY OUTCOMES? BETTER EFFICIENCY OUTCOMES? BETTER EFFICIENCY OUTCOMES? � The relationship between trade policy and economic The relationship between trade policy and economic p p p p y y performance is one of the oldest controversies in economic performance is one of the oldest controversies in economic development. development. � Do trade reforms lead to clear benefits in terms of higher � Do trade reforms lead to clear benefits in terms of higher Do trade reforms lead to clear benefits in terms of higher Do trade reforms lead to clear benefits in terms of higher economic growth and better economic performance. economic growth and better economic performance. � An influential view has concluded that countries with a more An influential view has concluded that countries with a more open trade orientation have tended to growth faster through open trade orientation have tended to growth faster through open trade orientation have tended to growth faster through open trade orientation have tended to growth faster through time. time. � This view has been contested by others who have argued that This view has been contested by others who have argued that there is little systematic evidence linking inward orientation and there is little systematic evidence linking inward orientation and h h i li l i li l i i id id li ki li ki i i d d i i i i d d growth, and that the evidence linking outward orientation and growth, and that the evidence linking outward orientation and growth has overstated the relationship between the two. growth has overstated the relationship between the two.

DOES TRADE REFORMS LEAD TO DOES TRADE REFORMS LEAD TO BETTER EQUITY OUTCOMES? BETTER EQUITY OUTCOMES? BETTER EQUITY OUTCOMES? BETTER EQUITY OUTCOMES? � Considerable debate on whether international trade can Considerable debate on whether international trade can be a powerful positive force in the reduction of poverty be a powerful positive force in the reduction of poverty and inequality in developing countries by creating jobs, and inequality in developing countries by creating jobs, especially for unskilled workers, and by reducing the especially for unskilled workers, and by reducing the p p y y , , y y g g inequality between workers of different skills and inequality between workers of different skills and educational levels, and between different regions in the educational levels, and between different regions in the same country. same country same country. same country � There have been concerns that trade reforms can, on There have been concerns that trade reforms can, on the contrary, lead to job destruction and higher wage the contrary, lead to job destruction and higher wage i i inequality in developing countries and that greater inequality in developing countries and that greater lit i d lit i d l l i i t i t i d th t d th t t t open open- -ness can exacerbate the inequality between ness can exacerbate the inequality between regions in a country. regions in a country.

THE INDIAN EXPERIENCE THE INDIAN EXPERIENCE THE INDIAN EXPERIENCE THE INDIAN EXPERIENCE � In the middle of the 1970s, the trade regime pertaining to the In the middle of the 1970s, the trade regime pertaining to the g g p p g g Indian manufacturing sector was one of the most restrictive in Indian manufacturing sector was one of the most restrictive in the world. the world. � It is widely recognised that the policy regime was a key It is widely recognised that the policy regime was a key contributing factor to the industrial stagnation observed in the contributing factor to the industrial stagnation observed in the Indian economy especially from 1966 to 1980 though the Indian economy especially from 1966 to 1980 though the Indian economy, especially from 1966 to 1980, though the Indian economy, especially from 1966 to 1980, though the policies towards self policies towards self- -reliance led to a diversified industrial base. reliance led to a diversified industrial base. � A process of gradual reform was initiated in the late 1970s, A process of gradual reform was initiated in the late 1970s, quickened in pace in the 1980s, culminating in 1991 in a radical quickened in pace in the 1980s, culminating in 1991 in a radical i k i k d i d i i i h 1980 h 1980 l i l i i i i 1991 i i 1991 i di di l l set of reforms that dismantled much of the import licensing set of reforms that dismantled much of the import licensing system. system.

STRUCTURE OF BOOK STRUCTURE OF BOOK STRUCTURE OF BOOK STRUCTURE OF BOOK 1. Trade Policy, Inequality and Performance 1. Trade Policy, Inequality and Performance – The Key y y q q y y The Key y � Analytical Issues Analytical Issues 2. Trade Policy in India 2. Trade Policy in India � 3. Growth and Structural Change in Indian Manufacturing, 3. Growth and Structural Change in Indian Manufacturing, 3 Growth and Structural Change in Indian Manufacturing 3 Growth and Structural Change in Indian Manufacturing � � 1975 1975- -1999 1999 4. Trade Policy and Economic Growth 4. Trade Policy and Economic Growth � 5. Trade Policy, Productivity and Prices 5. Trade Policy, Productivity and Prices � 6. International Trade and Employment 6. International Trade and Employment � 7 Trade Policy and Wage Inequality 7 Trade Policy and Wage Inequality 7. Trade Policy and Wage Inequality 7. Trade Policy and Wage Inequality � � 8. Trade Policy and Regional Inequality 8. Trade Policy and Regional Inequality � 9. Conclusion 9. Conclusion �

Some features of the analysis Some features of the analysis Some features of the analysis Some features of the analysis � In the book, I study the effect of trade reforms on the Indian In the book, I study the effect of trade reforms on the Indian y organised manufacturing sector organised manufacturing sector from the mid 1970s to the from the mid 1970s to the late 1990s using industries late 1990s using industries as units of analysis as units of analysis and and using using quantitative quantitative economic methods. q economic methods. � For the industry For the industry- -level analysis, we use panel data methods for a level analysis, we use panel data methods for a large number of industries for 25 years large number of industries for 25 years – – typically we work with typically we work with over 3500 observations. over 3500 observations. over 3500 observations. over 3500 observations. � Why manufacturing? Why manufacturing? � Why the organised/formal segment of the manufacturing Why the organised/formal segment of the manufacturing sector? sector? ? � The Choice of the Time Period The Choice of the Time Period � Why Industries as Units of Analysis? Why Industries as Units of Analysis? Why Industries as Units of Analysis? Why Industries as Units of Analysis?