It's always fun when a friend or colleague of yours is mentioned in The Economist. Last week was no exception, when the venerable periodical covered a recent piece on trade co-authored by Amit Khandelwal, a former Yale economics graduate student now at the Columbia Graduate School of Business as an assistant professor.
The research in question looks at the effects of imports on aspects of economic development. As the Economist piece points out, in policy discussions on trade, there is this belief that exporting is good for the home country's development, but importing is not. Khandelwal et al's piece shows that, in the case of India, imports have had some positive benefits. Quoting from the news article:
As part of those reforms, India slashed tariffs on imports from an average of 90% in 1991 to 30% in 1997. Not surprisingly, imports doubled in value over this period. But the effects on Indian manufacturing were not what the prophets of doom had predicted: output grew by over 50% in that time. And by looking carefully at what was imported and what it was used to make, the researchers found that cheaper and more accessible imports gave a big boost to India’s domestic industrial growth in the 1990s.
This was because the tariff cuts meant more than Indian consumers being able to satisfy their cravings for imported chocolate (though they did that, too). It gave Indian manufacturers access to a variety of intermediate and capital goods which had earlier been too expensive. The rise in imports of intermediate goods was much higher, at 227%, than the 90% growth in consumer-goods imports in the 13 years to 2000.
Good stuff.
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