| dc.description.abstract | Rationale and Objectives.
The recent inflow and projections of foreign investments into
India indicate that the international investing community
views India as a, potentially high growth economy, whose
industries are becoming increasingly "internationally
competitive. Recent studies have shown that after stagnation
during the 1960s and 1970s, there has been a turnaround in the
Indian industrial sector during the 1980s. In international
trade, however, india was completely left out of the virtual
revolution in the trade in manufactured goods that commenced
during the mid 1950s. The countries that took advantage of
this revolution viz. The Asian Tigers and other South East
Asian countries, some of whom were as underdeveloped as India
was then, have transformed their economies into high and
middle income industrial economies. India's share in world
trade dropped from over 2% in the 1950s to under 0.5% in the
1980s. It has improved marginally since then. The objective of
this study is to analyze the changing competitiveness of some
of India's important exporting industries vis-a-vis her main
competitor countries.
2. Sample and Methodology
The study focuses on four industries viz: Textiles, Wearing
Apparels, Leather Products and Footwear. These four industries
together, account for more than 50% of our manufactured
exports. The competing countries studied are Hong Kong, Korea,
Indonesia, Malaysia, Singapore and Turkey. The methodology
involves an analysis of factor productivity change and thereby
the dynamic comparative advantage. Historical annual data for
the period 1979 through 1990 were analyzed to obtain estimates
of the three main components of price competitiveness viz .
changes in total factor productivity, changes in terns of
trade, and changes in factor costs.
3. Findings
a) Indonesia ranks the highest in terms of growth rates of
exports, domestic production and a comprehensive measure
of competitiveness in all four industries. If the other
countries are to be ranked by the same criteria across
the four industries, Korea would rank second followed by
Turkey. India would occupy fourth position followed by
Malaysia, Hong Kong and Singapore. However, this finding
is unlikely to hold, if industries other than these four
are included in the analysis.
b) In terms of the comprehensive measure alone, for
textiles, Indonesia assumes first position, Malaysia
second and India fourth. In apparels, India is in third
position after Indonesia and Turkey. In leather, India is
first, and in footwear it is second only to Indonesia.
C) In terms of export growth alone, in textiles, Indonesia
and Honq Kong occupy first and second position
respectively. India is a poor fifth. In apparels, Turkey
and Indonesia occupy first and second position and India
ranks the last. In leather, Hong Kong and Indonesia are
first and second, and India is in sixth position. In
footwear, Indonesia and Hong Kong are in first and second
position, and India, is fourth.
d) In terms of domestic production growth alone, in
textiles, Indonesia and Korea are the top two with India
in the sixth position. In apparels, Indonesia and Turkey
are first and second with India in fourth position. In
leather, India is third after Korea and Indonesia. In
footwear, India is second only to Korea.
India occupies fairly good position with respect to all four
industries. Further, our performance can be improved through
tapping export potentials. These inferences are, however,
subject to some distortions, due to poor base levels of
exports/domestic production in Indonesia and Turkey, in
contrast to Hong Kong and Korea.
4. Implications
One of the factors responsible for India's poor export
performance was the overvalued rupee. This has since been
corrected but a regular monitoring of the exchange rate is
called for.
Textiles is an old industry in India, and our performance in
this industry could be improved through ensuring good growth
rate in productivity. In Apparels, India tops the list in
terms of TFP growth but our rank goes down due to poor export
performance. Leather and Footwear are clearly our strength
areas but we should not be complacent as we still have a long
way to go.
The success of Singapore and Hong Kong is mainly due to re export
and this offers great opportunities for us. | en |
