A Comparative Assessment of How Trade Liberalization and the Economic Crisis Have Impacted India and South Africa

Date period
17 December 2010

SummaryStructural reforms and the liberalization of foreign trade and investment have occurred all over the world. The majority of developing countries have embraced reforms that differ regarding the timing and speed of implementation but not in character. The economic model pursued has combined adjustment and stabilization reforms with the liberalization of foreign trade, increasing the level of competition in international markets.

As a result of their increased integration into the world economy, developing countries today are more exposed to the risks associated with external shocks. Indeed, most of them have suffered greatly from the decrease in global demand, the drying up of trade finance and the decline in investment and remittances resulting from the recent financial and economic crisis. While several developing nations have shown early signs of recovery, the crisis may have reversed modest progress towards poverty alleviation. Furthermore, social indicators suggest that natural rates of unemployment are likely to be higher in the future, prompting concerns about possible jobless growth.

With this comparative analysis, based on two detailed ICTSD’s papers on India and South Africa, ICTSD aims to contribute to a knowledge based debate on the impact of trade liberalization and the economic and financial crisis on the trade and labour market sectors.