Economic Openness: India Case Study

Our report highlights that India is a country with tremendous potential. Since the early 1990s, per capita income has grown at an average of 4% every year, which has lifted millions out of poverty, and it has developed a set of robust, and improving institutions along the way.

A report for the Global Index of Economic Openness programme by Stephen Brien and Daniel Herring

Published 6 Dec 2019

A comprehensive and in-depth report on economic openness in India.

The Legatum Institute’s mission is to create the pathways from poverty to prosperity, and our work is focused on understanding how prosperity is created. To that end, with the generous support of the Templeton World Charitable Foundation, we have published a Global Index of Economic Openness to rank countries’ ability to interact with, and benefit from, both domestic and international commerce.

This is one of multiple in-depth country reports, which analyse performance on the key characteristics of openness to trade, investment, ideas, competition, and talent.

Our report highlights that India is a country with tremendous potential. Since its independence, it has been the world’s largest democracy, and developed a set of robust, and improving, institutions along the way. Since liberalising its economy in the early 1990s, per capita income has grown at an average of 4% every year, which has lifted millions of people out of poverty. Since then, the Indian economy has become increasingly dynamic and diverse, and by 2050 it could be the world’s largest.

However, challenges remain. There are recent signs that the economy is slowing, and this report highlights a number of areas where there are still significant constraints on growth.

Reforms to address these challenges are not straightforward or politically easy. Nonetheless, India has shown throughout its history that, with political will, it can rise to confront massive challenges. India has a remarkable track record of using reforms to transform the economy and improve the lives of its people.

Executive Summary

This report explores the extent to which India has four fundamental characteristics of open economies, and where the opportunities lie for further development.

It reveals that India’s overall rank in the Global Index of Economic Openness is 57th, having risen 15 places over the last decade, and improving across all four pillars. It performs best for Enterprise Conditions and Governance, and weakest for Market Access and Infrastructure.

  • India’s Market Access and Infrastructure (87th) is improving and has risen eight places in the global rankings over the last decade. In spite of this improvement, it remains a weak point in the economy.
  • The Investment Environment (76th) has historically been weaker in India than other countries. However, significant improvements have been made in recent years, reversing a longer-term deterioration.
  • India’s Enterprise Conditions (42nd) have become a source of strength for the economy. Following concerted efforts by the Union Government, it has experienced the most dramatic improvement of all four pillars, rising 22 global ranks over the last decade.
  • The quality of Governance (46th) in India had, until recently, been on the decline. A turnaround in recent years, led by improvements in political accountability and government integrity, has ensured that India now ranks four places higher for Governance than in 2009.

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Economic Openness: India Case Study:

A comprehensive and in-depth report on economic openness in India.

By Stephen Brien and Daniel Herring

Dec 2019

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