{"id":252263,"date":"2023-07-15T20:50:45","date_gmt":"2023-07-15T15:20:45","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=252263"},"modified":"2023-08-31T12:19:47","modified_gmt":"2023-08-31T06:49:47","slug":"back-to-the-new-old-west-wind-east-wind-or-the-warnings-of-a-storm-2","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/back-to-the-new-old-west-wind-east-wind-or-the-warnings-of-a-storm-2\/","title":{"rendered":"Back to the new-old: West wind, East wind, or the warnings of a storm?"},"content":{"rendered":"\n

Source<\/strong>: The post is based on the article\u00a0\u201cBack to the new-old: West wind, East wind, or the warnings of a storm?<\/strong>\u201d published in Business Standard <\/strong>on\u00a015th<\/sup> July 2023<\/strong>.<\/p>\n

Syllabus: <\/strong>GS 3 \u2013 Growth & Development, Industrial Policy<\/strong><\/p>\n

Relevance: <\/strong>concerns associated with protectionist measures adopted by countries against China.<\/strong><\/p>\n

News:<\/strong> India implemented economic reforms in 1991. It was influenced by the Reagan-Thatcher era,<\/strong> which focused on reduced governmental role in the economy.<\/p>\n

What were the results of implementing the 1991 reforms?<\/strong><\/h2>\n

The reforms of 1991 were driven by the principles of liberalization, privatization, and globalization (LPG<\/strong>).<\/p>\n

The aim was to increase market orientation and stimulate economic growth, lower inflation, improve the trade balance, and ensure external economic viability. The reform was successful in achieving these objectives<\/strong>.<\/p>\n

However, the reform has not been able to boost manufacturing<\/strong>.<\/p>\n

What are the consequences of the failure of reforms in boosting the manufacturing sector?<\/strong><\/h2>\n

It has resulted in a lack of quality jobs, increased inequality and made India vulnerable to China <\/strong>by depending on it for strategic material imports.<\/p>\n

To reduce its vulnerability, India<\/strong> has adopted a more restrictive approach to trade by<\/strong> implementing tariff hikes, non-tariff barriers, and restrictions on Chinese products.<\/p>\n

This has given re-birth of government-directed industrial investment through policy tools like Investment subsidies, production incentives, tariff protection, etc.<\/p>\n

How is the situation of manufacturing in the US and in the Western countries?<\/strong><\/h2>\n

The US and countries in the West have also faced similar outcomes<\/strong> due to their incapability in reviving the manufacturing sector.<\/p>\n

Hence, to decrease their vulnerability to China, companies in the West have started investing in the US and establishing their plants.<\/strong><\/p>\n

The US has also imposed import barriers against Chinese goods and restricted the transfer of strategic technologies to China.<\/p>\n

In response, China has imposed export bans<\/strong> on gallium and germanium, essential materials in the electronic, electric vehicle, and telecom sectors.<\/p>\n

Further, governments in the West are allocating significant sums of money to avoid reliance on Chinese imports.<\/p>\n

For instance, <\/strong>subsidies per electric vehicle in the US and Europe amount to around $7,500. Companies like General Electric, which had de-emphasised manufacturing, are getting back into the sector.<\/p>\n

What can be the implications of the measures adopted by countries against China?<\/strong><\/h2>\n

These policies raise concern over the possibility of trade wars<\/strong>. Tariff hikes could also result in increased product prices and contribute to inflation.<\/p>\n

Although the talks have now shifted from decoupling from China towards de-risking and diversification, the risks remain over retaliatory actions and beggar-thy-neighbor subsidies from China.<\/p>\n

This may lead to an increase in the government debt of the Western countries.<\/p>\n

Must Read: <\/strong>De-risking, not decoupling: What\u2019s this G7 strategy against China?<\/strong><\/a><\/p>\n

What can be the way ahead for India?<\/strong><\/h2>\n

While de-risking and diversification are being taken up by other countries, India can focus on creating jobs in the manufacturing sector.<\/p>\n

However, India has chosen to follow other countries, focusing only on import substitution rather than creating jobs.<\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on the article\u00a0\u201cBack to the new-old: West wind, East wind, or the warnings of a storm?\u201d published in Business Standard on\u00a015th July 2023. Syllabus: GS 3 \u2013 Growth & Development, Industrial Policy Relevance: concerns associated with protectionist measures adopted by countries against China. News: India implemented economic reforms in 1991.… Continue reading Back to the new-old: West wind, East wind, or the warnings of a storm?<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[10503,216,8184],"class_list":["post-252263","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-business-standard","tag-gs-paper-3","tag-indian-economy","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":1700808249,"cached_date":1704844744},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/252263","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=252263"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/252263\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=252263"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=252263"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=252263"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}