Foreign Trade and Economic Growth of India since 1991

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Classical and neo-classical economists viewed foreign trade as a device for achieving productive efficiency. According to them, exports from the productive sectors have expansionary effects on incomes, investment and employment. Foreign trade is also expected to widen the markets and provide economies of scale and benefits of specialisation. The import sector has expansionary effects on the economy through promotion of technology and development base. Thus, both export and import help to accelerate economic growth in a country. Although free trade is often strongly advocated, many countries believe that the expansion of trade is best achieved through the establishment of liberalisation policy.The main aim of the present study is to analyse the effects of foreign trade on economic growth of India.

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