CIGI Papers, May, 2007
The robust performance of the Indian economy in recent years, with economic growth averaging 8.5 percent, has generated intense debate regarding India's future economic prospects. Indeed, the future of more than a billion people, many of whom still exist in degrading and unacceptable poverty and deprivation, depends critically on India's ability to grow at high rates. This paper, while examining the issue, argues that India's recent economic performance is a result of entering a virtuous circle of growth generated by some key structural drivers. The latter include a dynamic private sector, benign external environment and a well-functioning democracy. The paper also points out that high growth can be sustained only if necessary policies are adopted for removing binding constraints like poor infrastructure, stagnant agriculture and lack of fiscal space. The paper identifies education as the most critical sector requiring reforms, followed by public goods delivery and labour markets.
The post-Multi Fiber Agreement (MFA) trade regime in textile and apparel appears to be emerging in ways which are quite different from what had been widely anticipated before the termination of the Agreement on Textiles and Clothing (ATC). Since the end of the ATC, there has been a growing and spreading set of trade restrictions targeted primarily at China, the largest shipper of textile and apparel, through a series of agreements that we term China Containment Agreements. We discuss the evolution of these agreements, their behavioural responses, and then draw their parallels to those under the older MFA. We argue that there is potential for these restrictions to prolong and grow, as well as to spread to other products through the product-specific safeguards mechanism included in the conditions of China's World Trade Organization accession.