How have reforms in India and Mexico altered the economies of ...

[pane00]

How have reforms in India and Mexico altered the economies of both countries?
 
  What will be an ideal response?

Question 2

What is the most likely reason that consumers rarely protest import restrictions that raise the prices they pay for a specific product?
 
  A) They reason that if the import restrictions are removed, the foreign producers will raise their prices to those of the domestic producers anyway.
  B) Many countries prohibit consumers to band together to influence political actions.
  C) Typically, although the added costs to consumers for a given product are high in aggregate, they are fairly trivial for most individual consumers.
  D) They reason that if they do something to hurt domestic employment for one product, the displaced workers will then do something that will hurt their own employment.

[b614102004]

Answer to Question 1

In 1991, India's Prime Minister implemented market-opening reforms which reduced trade barriers, opened the door to increased FDI, and modernized the country's financial sector. Since then, India has attracted considerable FDI from MNCs from developed countries, and seen its GDP grow. For over half a century the Mexican government implemented a program of economic nationalism under which Mexico discouraged foreign investment and erected high tariff walls to protect its domestic industries. During the past three decades, however, Mexico has abandoned these policies and opened its markets to foreign goods and investors. Mexico also reduced the government's role in its economy by selling off many publicly owned firms. In 1994, Canada, Mexico, and the United States initiated the North American Free Trade Agreement (NAFTA), which reduced barriers to trade among the three countries over a 15-year period. Thousands of foreign companies have established new factories in Mexico to take advantage of NAFTA, generating hundreds of thousands of new jobs in the process.

Answer to Question 2

C