India's Economic Development and Foreign Policy Research Paper

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India's economic development & Foreign Policy

Foreign policy and economic development in India

India is currently the third largest economy of the globe, surpassed only by the United States and China (and the European Union, yet this is not an individual country). India has traditionally been a rather enclosed economy, with its economic operations focused mostly at the domestic level and limited interactions within the international market place.

Throughout the past two decades however, more emphasis has been placed on opening the country and liberalizing its economy. Some reforms that were implemented in this stance include the deregulation of industries, the privatization of state owned enterprises or the reduction of controls of international trade. These measures were implemented starting in the early 1990s decade and they have proved highly beneficial in the country's economic growth. Since 1997, India has averaged 7 per cent growth rate in its gross domestic product.

The process of market liberalization -- as part of the wider international policy of India -- has as such proven beneficial to the economic growth of the country. Nevertheless, at this stage, a question is being posed relative to the possibility of the economic growth in itself to have influenced the development and implementation of India's foreign policy.

In order to answer this question, a liberal theoretical framework for foreign policy would be employed, namely the liberal theory of international relations. Emphasis would also be placed on the economic stance of India, as well as the characteristics of its foreign policy throughout the past recent period (10-15 years).

2. The liberal theory of international relations

The liberal theory of international relations is a non-utopian model of analyzing the international relations of a country. It has initially originated from the analysis of the role of the social stance and the domestic laws, which influence the international relationships and decisions of a country.

The model has two distinctive advantages. On the one hand, it is realistic and considers reasonable and rational facts in its analysis. This means that the results it retrieves are pertinent and relevant in the context in which the assessment is conducted, not the context of an unattainable perfect market place. Then, the second benefit is represented by the fact that the liberal theory of international relations is a flexible theoretical framework. This virtually means that it allows the construction of several hypotheses of the impact on foreign policy, such as the role of democracy, nationalism, social inequality, international trade and commerce, international institutions, politics and so on (Moravcsik).

At this specific level, the implementation of the liberal theory of international relations framework for the current study commences at the creation of the following hypotheses, which will be assessed further on:

Hypothesis 1: The Indian foreign policy has not suffered notable modifications throughout the past years.

Hypothesis 2: Changes have occurred in the foreign policy of India and these have been generated by the development of economy.

Hypothesis 3: Changes have occurred in the international relations of India but these have been generated by elements other than the economic growth of the country.

2. The Indian economy

The Indian economy derives most of its growth through the services sector, yet the agricultural field continues to employ the largest share of the population (56 per cent). The economic activities in the country include village farming and modern agriculture, as well as handicrafts, modern industries and various services; the Indian economy is as such rather diversified.

The Indian population is well educated and most of the people speak English; the country has capitalized on this language and educational abilities and has commenced to sell IT services. Today, India is one of the largest exporters of IT services and these constitute the largest share of Indian exports in the segment of electronics products and services (Esc India).

The Indian economy has been registering steady growth throughout the past recent decades and this trend has also been revealed at the level of the living standards of the population. While 29 per cent of the population continues to live below the poverty line, the majority of the Indians have witnessed improvements in their living standards and purchase powers. This feature has helped the country overcome the internationalized economic crisis through an increase in domestic demand and consumption.

The future of India is positive due to the high level of education among the population and the large portion of the young population, as well as healthy savings and investment rates. Reforms since 2011 have nevertheless weakened due to numerous corruption scandals. Among the more notable challenges for India's future there are the "widespread poverty, inadequate physical and social infrastructure, limited non-agricultural employment opportunities, scarce access to quality basic and higher education, and accommodating rural-to-urban migration" (Central Intelligence Agency, 2012).

3. Indian foreign policy

The Indian foreign policy is influenced by the country's past and history, namely by the period it spent as a British colony. Within its international relations policy then, India was the first country to raise the question of discrimination. Its efforts revolve around the promotion of equality and the elimination of colonialism. Additionally, the Indian foreign relations policy also emphasizes on the need for peace and stability and their specific effort falls on the elimination of the threat of nuclear weapons and nuclear war. As part of its commitment to global peace, India has participated in all peace conferences and has provided its input.

The Indian foreign policy also pursues other agendas, such as economic stability for the entire global community, collaboration, the protection of human rights or the development of human activities in order to support environmental stability. All in all, the Indian foreign policy has been developed in a way to promote tow particular features -- the ability to promote the interests of the country and secondly, the ability to create mutually beneficial relationships within the global community.

Ultimately, the Indian foreign policy was formulated upon the country's independence and preserves the values of the state. It revolves around the following principles:

The development of cordial relationships with other countries

The resolution of conflicts by peaceful means

The maintenance of the sovereignty and the equality of all states

The maintenance of the independence of though and actions according to the principles of non-align movement, and last

The maintenance of equality in all international relations (Business Maps of India, 2010).

4. The impact of economic growth on foreign policy

As it has been mentioned throughout the previous section, the Indian foreign policy has been influenced by the country's history and it reflects the problems previously encountered by the country. Aside from this however, a question is now being posed relative to the potential influence of the economic stance of the past recent years (10-15 years) on the development of the foreign policy of the country. In order to answer this question, the project will employ the liberal theory of international relations and will conduct research to validate or invalidate the previously stated hypotheses.

Hypothesis 1: The Indian foreign policy has not suffered notable modifications throughout the past years.

The bases of the Indian foreign policy were set in the 1940s decade, when the country gained its independence from the British occupation. The values and principles of the initial policy are still preserved today, the more notable examples being India's current interest in the maintenance of sovereignty, equality and the abolition of colonialism.

Aside from these initial principles however, throughout the years, India has developed new values and integrated them in its foreign policy. For instance, during the 1970s decade, India developed a pragmatic approach to international relations and this concretized in a greater approach to the Soviet Union. In other words, the foreign policy tended to move India away from the United States and other developed nations in the West, and instead focused on the development of positive relationships with the Soviet Union.

The reason for this change in foreign policy and the international siding with the Soviet Union was generated by two distinctive elements. On the one hand, India had been using Soviet technology to extract and process its crude oil, which was essential for the country's economic development. On the other hand however, the United States of America was becoming more and more powerful and India's siding with the Soviet Union was aimed to reduce the growing power of the U.S. (Sinha, 2012).

By 1990s however, the global context had changed and the Soviet Union had fallen. This movement in the global framework drove India to once again change its approach of foreign policy. At this level, it moved away from its relationships with the countries in the former Soviet Union and focused on developing relationships with the states it had neglected before, including the U.S. At the specific level of the United States, India placed an increased emphasis on consolidating long-term relationships with the country (Lamba, 2006).

All in all, the movements in the global context drove India to make several changes in its foreign policy, which in…

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