ARE LIBERAL FOREIGN-INVESTMENT POLICIES GOOD FOR INDIA

This article examines an empirical regularity with respect to Indian i ndustrial behaviour and sets out the implications that follow from the result derived from the empirical analysis. The analysis explores the exporting behaviour patterns of over 1,000 firms with varying degrees of foreign ownership in India for the years 1988 to 1994, and is prin cipally a cross-section based analysis. Since the 1950s, India followe d a command-and-control based economy regime. This regime became excee dingly autarkic, particularly in the 1960s, with negative consequences on her ability to make headway in export markets or to attract foreig n investment. Since 1991, an economic policy switch is in progress and there have been moves towards a market-based regime in which foreign capital, both on the current account via the generation of export sale s as well as on the capital account via foreign investments, is expect ed to play a big part. An empirical examination of the consequences of following, or not really following as happened in the Indian case, li beral trade policies is absolutely necessary since economic policy-mak ing in India seems to be entirely based on ad hocism and intuition and not on the necessary and vital hard facts.