stage by a 'carrot and stick' policy mechanism.
8 One way multinational firms could overcome this disadvantage of small volume of production in the Indian market is by importing major part of components of a car and assembling them in India. But even this strategy might be mostly to capture the protected domestic market rather than for exports. If import protection in these final goods industries is removed, foreign direct investment in these industries may not come in at all. This author is grateful to Pankaj Chandra for pointing this out 9 The World Bank and IMF-sponsored structural adjustment and stabilisation policies are basically standardised package deals applied to the developing countries without regard for the specific institutional conditions of different countries. Recent times, there has been growing recognition that institutional conditions matter a lot more than just getting prices right. See Williamson (1995).
