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The Impact of Trade Liberalisation on Employment: Evidence from India’s Manufacturing Sector

Kakarlapudi, Kiran Kumar (2010): The Impact of Trade Liberalisation on Employment: Evidence from India’s Manufacturing Sector.

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Abstract

The Opening up of the economy brought in phenomenal changes in various dimensions of the economy. The growth performance of the Indian economy, though not spectacular, has been decent by the standards of developing countries after initiation of economic reforms. There has been a great debate in academia that the growth was not accompanied by an increase in employment growth. Stagnant growth in employment with impressive economic performance during last two decades is termed as “jobless growth”. Since the manufacturing employment has been subject to sweeping changes in the post reform period, this paper attempts to examine the possible impact of trade liberalisation on the growth of organised manufacturing employment at two digit levels by dividing industries into export oriented and import competing industries. Both the overall and manufacturing employment trends shows that there is a reduction in employment growth in the post- liberalisation period compare to the pre-liberalisation period. It is further found that deceleration of employment growth in the import competing industries is higher than export competing industries and that; trade liberalisation did not create any growth in employment through scale effect.

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