Change from Inside-Out or Outside-In? Trade Reform in India’s Closed Economy.

What makes trade reform possible in a traditionally closed economy? Economic reform and structural adjustment have been global movements for more than a decade by now, yet trade reform remains one of the most difficult arenas of policy change in many developing countries. The distributional politics of trade, and the rise of protectionist pressures in the advanced countries of the world, have contributed to a backlash against serious trade reform in many countries. Despite countervailing pressures in favor of rising protectionism, India's trade regime has undergone serious reform in the last decade, encompassing policy changes, outcomes, and institutional changes. During these years a party espousing economic nationalism and fear of the open economy has ruled the country. This empirical puzzle forms the starting point of this paper. I ask: how has trade reform been consolidated in a traditionally closed economy like India? I argue that crucial domestic societal changes are a necessary precondition for changes in state's attitudes; yet, external forces may change the preferences of domestic forces, as well as change the balance of power among interest groups. These, new coalitions in favor of greater global integration, come into contact with a activated state; these intra-group/intra-class factors combine with state-class transformations to effect change in trade orientation and reform turning toward a global openness. This paper, thus, highlights important mechanisms through which global trade integration and institutions shaped the domestic politics of trade. The international trade institutions not only constrain behavior of domestic actors, but also constitute interests and identities of key domestic actors. Moreover, participation in global trade negotiations changes the preferences of some producers, and strengthens the hands of recently created, externally oriented, domestic producers by bringing them closer to the national-state actors and by encouraging collaborative strategies between business and state actors. ..PAT.-Unpublished Manuscript [ABSTRACT FROM AUTHOR]