INDUSTRIAL POLICY' ' 5( from recommendations ofBela Balassa and other Believers in the theory of export-led growth, based on the experience of South Korea, Taiwan, Hong Kong and Singapore. Significandy, rh^ examples of Brazil, Argentina and Mexico are now carefully suppressed, though five or six years back, they were also4ield up as shining examples of the success of this policy. In a world of fast changing technology, several types of policy adjustments can be made by a country. The proper approach would be to adopt an "active adjustment policy", wherein the policy makers look ahead tp future comparative costs, based on the removal of structural bottlenecks, and on long term real resource availabilities. An 'active adjustment policy" does not have to be based on the dictum of exploiting external markets at faster than normal rates. An "active adjustment policy" is no different from a dynamic policy of self-reliance which is based on the endowment of resources , including human resources, of a country. In a world of fast changing exchange rates and import policy changies by other countries, there could arise the need for a less ambitious policy, less attuned to long term coiriparative costs. Such a policy may be defined as a "positive adjustment policy",, seeking to make use of medium term expectations of world supply arid demand. In times of extreme stress, one may need to make purely "defensive adjustments" from time to time. But in all these policy options, there is need for careful evaluation of the status, and the competitiveness of indigenous industry, which cannot just be thrown to the .w61ves. Even assuming thatt one is wedded to the dictum of competitiveness aAd export-led growth, one has to keep in mind long run competitiveness; one has to pursue an "active adjustment policy" which seeks to take note of long terrii comparative advantage. Exports, in this case, would grow provided world market conditions are favourable. But that is in any ^case a. necessary condition. Exports cannot grow, no matter what policy changes are introduced, if,the trading conditions in the rest of the world are not favourable. But there is no room here for panicky changes in policy, since every' country may be expected to take to "defensive adjustments" against any aggressive "over-sell" policy. The policy of export-led growth which i^s advocated by international institutions and researchers, is most untimely today, and may be likened to pursuing atoirage, because all forecasts of world trade appear to predict its stagnation and a decline in the growth rate^ of developed nations. As a result, there is unlikely to be any great surge in world demand for Indian exports of manufactured products. It is possible ^hat a few products or a few individual manufacturers may register a marked improvement in exports; but the overall rate of growth of exports is unlikely to be substantial. Even theOECD has forecast a sharp decline in world trade,, ^^ in world imports from developing countries.2 Indeed, the latest World Bank projection predicts a trade deficit for India of Rs. &,374 crores in 1987-88 from a level of around Rs. 5,700m 1988-84; and the present policies of import liberalization with a view to making industry more competitive, can only woYsen the position bv