Competitiveness of exports: a micro-level approach

Abstract

IN their article,' Samuel Paul and Vasante Mote conclude that ". . . it would seem that the competitiveness of the majority of products under study has been seriously affected by the pressure of internal demand operating in India." 2 The authors eventually state that the evidence suggests that a decline in domestic demand will improve an industry's export performance. The purpose of this note is to comment on: 1. The theoretical framework in the article, especially the lack of any clear predictions of the relationship between exports and domestic demand at the micro-level. 2. The authors' tests of the pressure hypothesis (the effect on exports of the pressure of domestic demand).