Vol. 16, Issue 1, Jul-Dec 2023

Page: 218-229

Influence of Trade Policies on Local Manufacturing Industries

Neelam Singh

Received Date: 2022-10-03

Accepted Date: 2022-11-04

Published Date: 2022-11-15

During the 2000s, India's industrial industry saw phenomenal expansion. Not only did yearly growth reach 8% on average, but actual exports and imports of manufactured goods also saw phenomenal increases in growth throughout this decade. Additionally, the greatest yearly increase rate of real per capita income (5.6% on average) occurred during this decade. Over the last 20 years, scholars studying international trade have begun to pay more attention to non-policy trade frictions, such as transportation, information, and communication costs, rather than trade policy itself. As a result of this change, many people think trade policy is irrelevant. To refute this, we take a close look at the abundant data showing how trade policy influences crucial economic outcomes. Instead of speculating about potential policy shifts, we zero in on real ones. First, we'll go over some of the methodological issues with measuring trade policy and determining its causes and consequences. Next, we'll go over the evidence regarding how trade policy impacts various outcomes. These include: (1) aggregate outcomes like trade volumes (and their price and quantity subcomponents), the extensive margin of trade, and static, aggregate gains from trade; (2) firm and industry performance like productivity, costs, and markups; (3) labour markets like wages, employment, and wage inequality; (4) long-run trends like aggregate growth and poverty, secondary distortions, and misallocation, and uncertainty.

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