Show Summary Details
You do not have access to this content

No easy balancing act: reducing the balance-of-payments constraint, improving export competitiveness and productivity, and absorbing surplus labor – the Indian experience

Suranjana Nabar-Bhaduri

Keywords: balance-of-payments constraint; export dynamics; technology gaps; import content of exports; structural heterogeneity; services-led growth

Abstract

As per the balance-of-payments constraint hypothesis, in an open economy, achieving a higher long-run rate of growth requires a country to reduce its balance-of-payments constraint through an improved export performance, and the production of import substitutes, which would lower the income elasticity of demand for imports. In developing countries, a sustainable and inclusive process of development also requires the generation of high productivity activities and quality employment. By focusing on the Indian case, this paper shows that even if a developing country manages to reduce its balance-of-payments constraint, concentrated improvements in productivity and employment may remain at the industrial level. Furthermore, a reduction of the balance-of-payments constraint may be more the result of an improvement in the net exports of services than an improvement in the external competitiveness of merchandise exports. Such a services-led reduction of the balance-of-payments constraint may not address the problem of generating large-scale quality employment and making the growth process more inclusive.

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.


Further information

or login to access all content.