What are the consequences of economic liberalisation
Answers
Liberalization is supposed usually to bring in large amounts of direct foreign investment. What has come into the Indian economy after liberalization however is not so much direct foreign investment as ‘hot money’ interested in speculation. This is hardly surprising: what we have witnessed of late is a ‘globalization of finance’ rather than a ‘globalization of production’. Liberalization in these circumstances causes economic stagnation, rather than growth, as the economy gets tied to the caprices of international rentiers. It also reduces domestic food availability in the pursuit of agri-exports. The Indian experience confirms this, but with one exception: an increase in the fiscal deficit after an initial phase of deflation (contrary to what liberalization entails) stimulated a brief industrial recovery, but this too has started petering out .
The primary goals of economic liberalization are the free flow of capital between nations and the efficient allocation of resources and competitive advantages. ... One of the main effects of this increased flow of capital into the country is it makes it cheaper for companies to access capital from investors.