ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Theory and Practice of International Trade

Some insights into the prospects of the Indian garment industry in terms of opportunities for a larger share of the world export trade and whether it would create many more jobs.

At a panel discussing Modinomics in Washington, someone raised the question of the opportunities for India to get a larger share of the world garment export trade as Chinese wages rise. Several panellists seemed to think that appropriate policy reform was the critical missing element, which would encourage investors and importers/exporters to engage in more garment manufacture.

The ensuing discussion revealed a basic incompatibility between how economists characteristically think about international trade and how it is conducted. One of the most basic concepts of theoretical economics is that of comparative advantage—and indeed as an abstract and logical theory it is hard to argue against. Nonetheless, a lot of theories and concepts have presented how and why deviations from comparative advantage are possible and present either to improve overall bargaining positions, exploit market imperfections, including competitive advantage, or to achieve other goals. Some deviations focus on a redefinition of the conditions in which markets actually operate such as the Stolper–Samuelson theorem or the Balassa–Samuelson effect.

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Updated On : 17th Jan, 2017

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