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This paper examines the impact of economic liberalization on interregional inequality in India. It has been observed in many studies that interregional inequality in India has been steadily increasing over time. This paper is a further confirmation of this result. We have tried to locate the cause of rising interregional inequality within the production structure of the economy and observed that it is positively and systematically related to the cross-regional inequalities in agriculture and manufacturing. This systematic relationship has further been examined from a structuralist viewpoint to unravel the factors determining manufacturing production across regions where we have found that trade openness is the key factor determining the manufacturing share in income across the regions. Our further enquiry into manufacturing and trade patterns has shown that the Herfindahl index of concentration has been increasing over time on both counts. This result, along with the findings of the structuralist model about disproportionate growth of manufacturing across regions, provides an explanation of the cause of rising interregional inequality in India. Copyright (C) 2010 Blackwell Publishing Ltd.

This paper is an attempt to demonstrate how the entry (costless) of firms in an industry may have a dramatic effect on exports from an industry in a country. The results have tremendous implications for LDCs suffering from resource and BOP constraints but having reservoirs of cheap labor. The welfare effects of such entry liberalization policy (or subsidy) can be stated from the Bhagwati theorem that a reduction in an only (single) distortion is necessarily welfare improving by reducing monopoly or oligopoly distortions. However, we have shown that the entry liberalization policy is welfare superior to an equivalent subsidy policy where equivalent is defined in terms of the impact on exports. As a by product, we have also shown how one can integrate the oligopoly models of trade with the general oligopoly literature. The results on the limiting behaviour of an open economy oligopoly model extend the standard results in the oligopoly theory in a closed economy.Entry liberalization and export performance, entry, trade and the limiting behaviour,

This paper critically examines the relevance of the Look East Policy for the industrialisation of the northeastern region of India. While recognising the strategic and political importance of the northeast in formulating India's neo-economic diplomacy and foreign policy is a positive step, it remains a mystery as to when the Look East Policy became the new paradigm of development for the region. A myth has been created, possibly to woo voters of the region, that the Look East Policy can be an effective instrument with unlimited scope for the region to engage in international trade with the booming east and the south-east Asian markets, which in turn would provide opportunities for industrialisation and growth. We argue in this paper that this is a far-fetched belief, as opportunities for trade have never been a constraint in the region. In fact, the region had been exposed to international trade on a massive scale during the late-nineteenth century, which continued until India's independence, but this has hardly had any impact on the region's economy. So, the real problem of development even today is not really the lack of trading opportunities. The crucial constraints to development faced by the region are the lack of intra-regional Alokesh Barua is Professor at and intra-state connectivity and trade, infrastructure, security and governance. The new paradigm of development seems to ignore these constraints by diverting attention to an issue (i.e., connectivity with the outside world) which may have only a marginal impact upon the economy.

Inclusive economic development has become a pressing goal of government policy in India in the face of rising regional inequality. This paper examines the role of targeted development policy action in inducing economic growth and also in reducing regional income inequality during the last two decades (since the beginning of the 1990s)-a period marked by increasing trade openness. In our disaggregated analysis of the states, we find that while the government capital expenditure policy has had significant positive impact on output growth of the poorer states, it failed to break the trend of escalating regional inequality. The policy has been significantly more effective in enhancing manufacturing sector output in the poorer states compared with the richer states. On the trade front, while the poorer states gained somewhat in income growth from greater openness, the gains were not large enough to offset the increasing regional disparity.