The Role of Trade and International Economic Policy in Indian Economic Performance

20 Pages Posted: 2 Dec 2008

See all articles by Anne O. Krueger

Anne O. Krueger

International Monetary Fund (IMF); Stanford University - Graduate School of Business; National Bureau of Economic Research (NBER)


India's economic policies have undergone major reforms since the early 1990s. Before that, government regulation and control of economic activity was pervasive, and the trade sector did very poorly. One consequence was that imports were highly restricted and their scarcity was itself a major constraint on growth. After the crisis of the early 1990s, trade policy was substantially liberalized. In this paper, the pre-1990s regime is first briefly described. Thereafter, the economic policy reforms that impinged most directly on the trade sector are set forth, and the response of exports and imports to those changes is outlined. Exports have grown rapidly, from about 5% of the gross domestic product to around 15%, and they continue to grow at an average annual rate of 20%. Improved performance of the trade sector has been a major contributing factor to India's dramatically accelerated growth performance. A final section of this paper assesses the current situation, and sets forth the major policy challenges that will need to be met if that performance is to be sustained, if not improved upon.

Keywords: economic policy reform, Indian economic policy, Indian exports and imports, India's trade, trade liberalization

JEL Classification: F1, O1, O2, O5

Suggested Citation

Krueger, Anne O., The Role of Trade and International Economic Policy in Indian Economic Performance. Asian Economic Policy Review, Vol. 3, Issue 2, pp. 266-285, December 2008, Available at SSRN: or

Anne O. Krueger (Contact Author)

International Monetary Fund (IMF) ( email )

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