What is libralisation and what its merits and demerits?

Answer 1

A liberalisation approach is opposed to closed economy. Any country which is a developing economy and also poor may not be able to withstand an international competition for its manufactured goods. So to protect their own industries within their country they follow a closed economy method whereby they will not allow the sale of goods of foreign origin in their country even if it means the foreign goods have much better quality and cheaper than domestic goods. Once such a country reaches a level of competence and an economic standing which can afford Research and Development , it should allow foreign competition so that domestic manufacturers, industrial houses invest in R&D and improve the quality of goods to survive the competition from foreign goods. The advantage is that consumers get quality goods at cheaper prices. Domestic manufacturers get out of their slumber and produce better quality goods offering better salaries to skilled workers. In addition to that sometimes domestic manufacturers can eat in to the market share of multinationals who arrived and can even buy them or takeover them. India is the best example for all this. After liberalisation many Indian companies not only withstood foreign goods or competition they had even taken over the multinational companies businesses.