RTAs and South Asia: options in the wake of Cancun fiasco

The purpose of this paper, therefore, is to systematically address the situation in general and with emphasis on South Asia if the failed trade talks at Cancun throw weight behind the formation of more and more bilateral and regional trade treaties. Should they make a renewed effort to kick-start SAPTA? Should they look eastward and try to cooperate more with ASEAN and other East Asian economies? Should they further deepen trading relations with their traditional partners the EU and US? This paper contains six sections (including introduction). Section II provides a quick recap of the series of events, which resulted in Cancun debacle. Section III takes into account the proliferation of RTAs over the last two decades, change in US approach towards regionalism, further deepening and widening of EU and formation of Asia Pacific Economic Cooperation. Section IV in very brief follows the development since the Cancun collapse, the US efforts to follow bilateral path in FTAA negotiations and Indias Look East policy. Section V analyses the reasons behind low intra-regional trade. Section VI makes a comparison of intra-SAARC trade with other Southern RTAs, Finally the paper ends with looking into the possible options for South Asia in the post-Cancun scenario

Economic growth in India during 1950-2015:Nehruvian socialism to market capitalism

Comparisons of pre and postreform economic growth in India are widely researched in the literature. This paper adds to this literature, but with a sectoral growth accounting perspective. We compare the proximate sources of economic growth in India during the 1950-1980 periods, the so-called Nehruvian socialist regime, with that of the post-1980 period, which includes the pro-business reforms in the 1980s and more aggressive pro-market reforms in the 1990s. We document two important features of India's growth dynamics. First, the overriding importance of the services sector in India's growth is not new, but it has always been the case in independent India. However, there has been a major shift in the composition of service sector growth. While the socialist regime fostered more nonmarket services, including the government sector, the market services sector flourished in the market regime, in terms of labour productivity, TFP and economic growth. Second, the economic growth in the socialist period was substantially driven by capital accumulation, except in the nonmarket services, whereas the market regime sees a combination of both productivity and capital accumulation

Strategic Sensemaking and Political Connections in Unstable Institutional Contexts

Emerging economies are often characterized by pervasive institutional changes and resultant institutional voids. In the absence of strong formal institutions, firms rely on informal institutions to fill these voids. This article argues that the process of sensemaking for firms in turbulent environments is continuous and dependent on cyclical adjustments connecting performance via a feedback loop to scanning and interpretation. Far from being a one-time occurrence, environmental sensemaking is a process operating in accord with continuous environmental changes. This study’s findings derive from an in-depth analysis of a Russian pharmaceutical firm and an Indian telecommunications firm, and demonstrate that entrepreneurs make sense and gain legitimacy through political connections. The study further finds that improvements in institutional environments reduce the salience of political networks, thereby creating a choice for firms to rely on formed market mechanisms or continue along the path of political connections that evolve to public–private partnerships

Temporary Shocks and Offshoring: The Role of External Economies and Firm Heterogeneity

We construct a model of offshoring with externalities and firm heterogeneity. Due to the presence of externalities, temporary shocks like the Y2K problem can have permanent effects, i.e., they can permanently raise the extent of offshoring in an industry. Also, the initial advantage of a country as a potential host for outsourcing activities can create a lock in effect, whereby late movers have a comparative disadvantage. Furthermore, the existence of firm heterogeneity along with externalities can help explain the dynamic process of offshoring, where the most productive firms offshore first and the others follow later. Finally, we work out some unexpected welfare implications which show that net industry profits can be lower in an outsourcing equilibrium than in a regime of no outsourcing. Consumer welfare rises, and under fairly plausible conditions this effect can offset the negative impact on profits