The new economic policy has also made the economy outwardly oriented such that its activities are now to be governed both by the domestic market as also the world market. In fact his will mean unification or integration of the domestic economy with the world economy. This is the result of a number of policy Initiatives taken by the Government. Devaluation of the rupee in July 1991 was intended to do way with the artificially controlled over valued exchange rate of the rupee and to bring it down to the realistic level in terms of the domestic price-level and the world price-level. The rupee has also been made fully convertible on current account of the balance of payments. The removal of licensing of a large many import-items has also enabled with the foreign exchange available in the market. The high custom duties on Imports have been reduced with a view to bring them in line with the duties in other countries. Although these are still high in comparison, yet the direction has been set to align them with other countries.
In the field of exports too there is much larger area to operate upon. No less important is the easy entry for the foreign direct. Investment made possible under the new policy this can be upto 5 percent of the investment in a project and can even be cent percent in certain specified projects. All this adds upto an economy which is open on the respect of movements of exchange rate, foreign exchange. Imports Exports and foreign direct investment. As such it is now a port and placed of the global economy, although it is so not completely.
Free trade opens opportunities for increased flow of merchandise around the world. Creating new jobs, higher incomes more purchasing power and greater demand for goods and services. Free trade means access to state of the art technology at international prices countries that have lowered trade berries have been able to produce relatively high quality goods at low prices. Free trade has helped create millions of new jobs in both developed and developing countries. Free trade, like free competition is likely to create economic insecurity industries and jobs move to countries or regions that have a comparative advantage in manufacturing those goods. Take the case of appeared Industry in the U.S. It has struck, considerably in the last four decades from 2% of domestic production in early 1960s appeared imports have risen to over 60% now employment in U.S. appeared industry has fallen by around 560, often comes about in two ways. 560,000 since 1979.
Decline in jobs often comes about in two ways on when workers restore this positions are not filled tow in the face of declining demand, companies reference workers these workers have to look for new jobs in other industries. These workers are certainly affected by free trade and they need temporary support to hide over the economic crisis created by free trade nations should create Institutions to assist those who are hurt by freer trade, and find it difficult to copy with consequences.
In certain traditional manufacturing Industries will be fought between developing countries both developed had and developed counties can use the close us a protectionist Instrument which would not be good for the growth and prosperity of the global economy.
In certain traditional manufacturing Industries will be fought between developing countries both developed had and developed countries can use the close us a protectionist Instrument which would not be good for the growth and prosperity of the global economy.