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Computational Analysis of the Impact on India of the Uruguay Round and the Forthcoming WTO Trade Negotiations

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  • Rajesh Chadha
  • Drusilla K. Brown
  • Alan V. Deardorff
  • Robert M. Stern

Abstract

The Indian economy has experienced a major transformation during the decade of the 1990s. Apart from the impact of various unilateral economic reforms undertaken since 1991, the economy also had to reorient itself to the changing multilateral trade discipline within the newly written GATT-WTO framework. The unilateral trade policy measures have encompassed exchange-rate policy, foreign investment, external borrowing, import licensing, custom tariffs, and export subsidies. The multilateral aspect of India's trade policy refers to India's WTO commitments regarding trade in goods and services, trade-related investment measures, and intellectual property rights. The present study analyzes the economic effects on India and other major trading countries/regions of the Uruguay Round (UR) trade liberalization and the liberalization that might be undertaken in a new WTO negotiating round. India's welfare gain is expected ot be 1.1% ($4.7 billion over its 2005 GDP) when the UR scenarios get fully implemented. The additional welfare gain is an estimated 2.7% ($11.4 billion) when the assumed future WTO round of multilateral trade liberalization is achieved. Resources would be allocated in India to the labor-intensive sectors such as textiles, clothing, leather and leather products, and food, beverages, and tobacco. These sectors would also experience growth in output and exports. Real returns to both labor and capital would increase in the economy. The scale effect (percent change in output per firm) is positive for all the ten sectors of manufacturing, indicating that Indian firms become more efficient than before. Finally, even if India undertakes unilateral trade liberalization of the order indicated in the WTO multilateral scenarios, it would still benefit, although less so than with multilateral liberalization.

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Bibliographic Info

Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 312.

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Length: pages
Date of creation: 01 May 2000
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Handle: RePEc:wdi:papers:2000-312

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  1. Yannis M. Ioannides, 2004. "Topologies Of Social Interactions," Econometric Society 2004 North American Winter Meetings, Econometric Society 287, Econometric Society.
  2. Rajesh Chadha & Sanjib Pohit & Alan V. Deardorff & Robert M. Stern, 1998. "Analysis of India's Policy Reforms," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 21(2), pages 235-259, 03.
  3. Brown, D.K. & Stern, R.M., 1999. "Measurement and Modeling of the Economic Effects of Trade and Investment Barriers in Services," Working Papers, Research Seminar in International Economics, University of Michigan 453, Research Seminar in International Economics, University of Michigan.
  4. Gilbert E. Metcalf, 2006. "Tax Incidence," Discussion Papers Series, Department of Economics, Tufts University, Department of Economics, Tufts University 0607, Department of Economics, Tufts University.
  5. Ioannides, Yannis M., 2003. "Interactive property valuations," Journal of Urban Economics, Elsevier, vol. 53(1), pages 145-170, January.
  6. Drusilla K. Brown & Rajesh Chadha & Alan V. Deardorff & Robert M. Stern, 2001. "Computational Analysis of the Impact on India of the Uruguay Round and the Forthcoming WTO Trade Negotiations," Discussion Papers Series, Department of Economics, Tufts University, Department of Economics, Tufts University 0107, Department of Economics, Tufts University.
  7. Brown, D.K. & Deardorff, A.V. & Stern, R.M., 1993. "Protection and Real Wages: Old and New Trade Theories and Their Empirical Conterparts," Working Papers, Research Seminar in International Economics, University of Michigan 331, Research Seminar in International Economics, University of Michigan.
  8. Karen Eggleston, 2001. "Multitasking, Competition and Provider Payment," Discussion Papers Series, Department of Economics, Tufts University, Department of Economics, Tufts University 0101, Department of Economics, Tufts University.
  9. Drusilla K. Brown & Alan V. Deardorff & Robert M. Stern, 2001. "CGE Modeling and Analysis of Multilateral and Regional Negotiating Options," Discussion Papers Series, Department of Economics, Tufts University, Department of Economics, Tufts University 0108, Department of Economics, Tufts University.
  10. Hoekman, Bernard, 1995. "Tentative First Steps: An Assessment of the Uruguay Round Agreement on Services," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1150, C.E.P.R. Discussion Papers.
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  14. repec:fth:michin:453 is not listed on IDEAS
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Cited by:
  1. Rajesh Chadha & Drusilla K. Brown & Alan V. Deardorff & Robert M. Stern, 2000. "Computational Analysis of the Impact on India of the Uruguay Round and the Forthcoming WTO Trade Negotiations," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan 312, William Davidson Institute at the University of Michigan.
  2. John Whalley, 2004. "Assessing the Benefits to Developing Countries of Liberalisation in Services Trade," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 27(8), pages 1223-1253, 08.
  3. George Norman & Lynne Pepall & Dan Richards, 2001. "Versioning, Brand-Stretching, and the Evolution of e-Commerce Markets," Discussion Papers Series, Department of Economics, Tufts University, Department of Economics, Tufts University 0114, Department of Economics, Tufts University.
  4. Henk Kox & Arjan Lejour, 2004. "A different approach to WTO negotiations in services," CPB Discussion Paper, CPB Netherlands Bureau for Economic Policy Analysis 36, CPB Netherlands Bureau for Economic Policy Analysis.
  5. Martha Rodríguez & Bruno Seminario, 2006. "Efectos potenciales de la desgravación arancelaria de un Tratado de Libre Comercio con Estados Unidos," Working Papers, Departamento de Economía, Universidad del Pacífico 06-12, Departamento de Economía, Universidad del Pacífico, revised Dec 2006.

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