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Difficulty: MediumEconomics in the Global Age

The following is an excerpt from a budget speech delivered by Indian Finance Minister Manmohan Singh in 1991:

"The system of political and bureaucratic controls over economic life has outlived its usefulness. Our industrial policy must now focus on dismantling the regulatory hurdles that have stifled entrepreneurial spirit and limited our integration with the global economy. By opening our doors to foreign investment and reducing tariff barriers, we are not surrendering our economic sovereignty, but rather equipping our nation to compete in the global marketplace."

The economic policies proposed in the passage best reflect which of the following global trends in the late twentieth century?

  1. A
    A resurgence of mercantilist policies designed to restrict foreign imports and accumulate bullion.
  2. B
    The reestablishment of direct colonial rule and administrative control by Western powers.
  3. The global spread of free-market economic principles and deregulation.Answer
  4. D
    The implementation of Green Revolution initiatives to transition toward organic agricultural production.

Answer

The economic policies proposed in the passage best reflect the global spread of free-market economic principles and deregulation.
The correct answer is correct because the speech from 1991 outlines India's shift away from state-controlled import-substitution industrialization toward economic liberalization, deregulation, and integration into the global free-market system. This reflects the broader global trend of neoliberalism and free-market reform that occurred in various parts of the world, including China, the former Soviet bloc, and Latin America, in the late twentieth century.

Step-by-Step Solution

1
Analyze the stimulus for the main economic argument.
The passage advocates for dismantling bureaucratic controls, reducing tariff barriers, and increasing integration with the global economy through foreign investment.
Understanding the core focus of the source is necessary to connect it to broader historical trends.
2
Contextualize the document within late twentieth-century world history.
The year 1991 corresponds to the end of the Cold War and a period of rapid economic globalization, where many developing nations transitioned from state-directed economies to market-oriented reforms.
Placing the source in its correct chronological and thematic context helps identify the correct global trend.
3
Evaluate the options based on the historical context and the source content.
The shift away from controls and toward global market competition matches the concept of economic liberalization and deregulation, which was a widespread trend across Latin America, Eastern Europe, and Asia in the late 1900s.
This confirms that the option describing the spread of free-market principles is the most accurate description.

Key Concept

Economics in the Global Age
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Economics in the Global Age

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