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The liberalization initiative commenced in India from 1991 onwards, replacing the four-decade long import substitution policy. The primary objective was to enhance the role of foreign and private investment, in line with the newly embraced outward-oriented growth model. The government had undertaken several policy initiatives since then, especially to strengthen the manufacturing sector which plays an important role in the economic development of any country. The current study evaluates the effects of the liberalization policy in India on industrial outcomes. Recent studies have found that when firm heterogeneity is present in trade models, reforms will lead to a decrease in the number of firms and a rise in their average size (Melitz, 2003). A dataset of 24 manufacturing industries had been used in the current study. We test empirically whether liberalization had led to a rise in the average size of establishments as stated in the literature. We also attempt to analyze the magnitude of trade costs in terms of the impact of reforms on wages and prices. The empirical analysis based on the difference-in-difference (DID) estimation method shows that on average, trade reforms do not lead to an increase in the real wages and average size of establishments. In addition, prices appear to increase in the long run due to liberalization, with potential ramifications.

In this chapter, the author considers a three-sector general equilibrium model in the context of a developing nation to find out the impact of an increase in foreign capital inflow on the welfare level of the nation. Comparative static analysis reveals that an increase in the inflow of foreign capital causes redistribution across the factors of production and a reallocation of resources, reflected through the change in output. Moreover, the author considers the case of technology transfer and proves that an increase in foreign capital inflow makes the country better off in terms of social welfare even if the foreign capital is fully repatriated. Hence, this work shows that in the absence of any trade distortion, a partial investment liberalisation causes a welfare gain for a small open economy.

Asia has emerged as the fastest growing economic region in the world at present. The region is endowed with 60% of global population with a huge market size, making the region an attractive destination for trade to the countries around the world. In 2017, almost 38% of global import was made solely by this region. Among the Asian countries, India has been able to establish itself as a consistent performer in trade during last three decades. The volume of its global trade (export + import) has increased remarkably by more than 32 times (from 33.22 billion USD in 1988 to 1,081.36 billion USD in 2017) within this period. India's trade with its major Asian partners has gone through a considerable change in its volume, direction, nature, and composition in the period of trade liberalization. Both export and import have increased manifold during this period with a faster increment in imports over its exports, resulting a huge trade deficit of 109.36 billion USD in 2017. Undoubtedly, it is a matter of concern for India. The present study is an attempt to evaluate the changes in pattern of India's trade, volume of export and import, and balance of trade with other Asian countries in the context of changes in trade policy, tariff rates, exchange rates, FDI, and economic growth during 1988 to 2017.

This chapter focuses to study the aspect of dynamic profitability of the Indian computer industry in the post tariff rationalization period, i.e., complete elimination of tariff on imported computers parts and component after implementation of Information Technology Agreement (ITA) in 2004. If trade liberalization affects profitability, then it also interrupts the firm's financial structure because a firm reduces its short-run debts when it generates huge profit. On the contrary, higher marginal return or profitability of asset encourages the debtor to invest more. In fact, trade liberalization may affect investment through marginal profitability of asset by varying projected sales and costs of imported inputs, i.e., by altering the imported input price. This study examines the viable relationship between dynamic profitability and directives of the ITA. The sample selected from 51 Indian computer firms (14 hardware firms and 37 software firms) level data ranging from 2000–2001 to 2018–2019 and by application of dynamic panel data, the results are analyzed in this research work. This chapter observes that return on asset is negatively significant with the ratio between short-term liability and total liability for both the software and hardware sector of Indian computer industry in post-ITA policy timeline.

Increasing trade liberalization and financial integration with rise in foreign direct investment (FDI) flows have an intense impact on the labor market of both the developed as well as the developing world. The restructuring of economic activity has resulted in destruction of jobs in some parts of the economy and start-ups of new firms in the other part, growing import competition with foreign firms displacing local firms, relocation of jobs from high wage to low wage nations. It is claimed that rapid globalization has also the outcome of “race to the bottom” in terms of wages and the quality of employment. As per the latest International Labor Organization (ILO) Global Employment Trends, 2022, total global number of unemployed youths is estimated to reach 73 million in 2022 but still six million above the prepandemic level of 2019. The latest press release October 2022 points out that trade growth is likely to experience a slowdown in 2023 due to multiple shocks on global economy. High energy prices due to the Russia–Ukraine war is expected to contract household expenditure and raise the cost of manufacturing. The present chapter seeks to analyze the impact of trade flows on the labor market – job creation or job loss, wage inequality, movement toward informal economy, gender inequalities, and other related issues. The data are based on various reports available from the ILO, the World Development Indicators (WDI) and the United Nations Conference on Trade and Development (UNCTAD), and World Trade Oorganization (WTO) Trade Reports. The empirical analysis also confirms that there is a unidirectional causality from trade to employment generation.

The context of skill creation and its development is fundamental to sustainable economic growth with vertical improvement in well-being. Now when it comes to the case of less developed countries, the implication of international trade in skill formation takes an idiosyncratic shape so far as our concern: a dearth of skill education and lack of evenness in access to skill education due to the underlying rampant and pronounced economic inequality (i.e., inequality in income and wealth) among people as what is quite typical. Against this backdrop, this chapter seeks to develop a general equilibrium model in line with Jones (1965 & 1971) and Beladi and Marjit (1996) to address how leveraging of foreign trade through technological modernization of exports may work toward skill formation in less developed economies with technological dualism, informalization, and disguised unemployment. Besides, this chapter brings to glare how benefit of such modernization toward skill development stands out to be weighed against a potential worsening of distributive justice in terms of rise in wage gap between skilled and unskilled workers. Moreover, this chapter seeks to overhaul the implication of liberalization of labor market in terms of dilution of minimum wage standard for human development. Thus, the bottom line is that comes up here forth that export modernization in name of improving external competitiveness and thereof attaining effective trade openness can promote skilled human but only risking an exacerbation of wage inequality.

This chapter aims to critically analyse the implications that the national protectionist policies have on the global supply and value chains and the relocation of production. The analysis is based on the assumptions that the global economy is facing the possibility of decoupling of many trade connections, and this trend favours de-globalisation processes that have long been promoted by populism, nationalism and economic protectionism. It is concluded that global supply, production and value chains although being economically efficient are no longer any more secure under national protectionist policies, and therefore, the relocation of production processes is mainly due to the increase in the level of income and wages of the developing countries that are the destination and which reduce the advantages to relocate.

It has been already established that the countries that have opened their economies in advance have reaped more benefits compared to those who have done it late. For example, the countries of the West are far away from the countries of the East in terms of the per capita incomes as because, besides others, the magnitudes of trade openness of the former are higher compared to that of the latter. Besides countries, there are some economic groups such as European Union, Organization of Economic Cooperation and Development (OECD), etc. who have proved the similar growth impacts of trade. There is another group of highly developing economies, with the acronym of BRICS (Brazil, Russia, India, China and South Africa), which has proved as being highly beneficiaries of the trade liberalisation. But the magnitudes of trade openness and their impacts in these countries are subject to further explorations using modern data. The present chapter aims to compute trade openness using two different methods for the BRICS countries and make association of it with growth and foreign currency reserves (FCRs) for the period 1991–2019. In addition, the study examines whether the FCR is sustainable. It observes positive and negative correlations between economic openness and gross domestic product (GDP) growth and FCR in the member nations leading to mean that trade openness has definitely contributed to the growth as well as accumulation of FCRs. But, the trends in the FCRs are unsustainable in the BRICS nations.