What Will Be the Impact of US Elections on Indian Jobs?

Wed, 9 Nov Pre-Open

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By the time you read this, the hoopla around the US presidential elections would have settled. The American people would have given their verdict - Hillary or Donald. But no matter who wins, the outcome would have ripple effect on every economy in the world. You see, the US is by far the biggest economy on earth; any decisions made by the US government can have the most impact.

India wouldn't be an exception. The decision will change the definition of trade agreements, immigration, and foreign policy between the US and India. But let us limit our focus on the employment front in this article. The question then is this: What impact will the newly elected president have on the jobs in India? Allow us to explain.

In recent history, the US has been a pioneer of free trade. The logic is simple. Free trade benefits both countries, as each can specialise in producing what they do best. Poor countries provide goods that require cheap labour. Rich countries provide goods that require high expertise. The poor country benefits from increased employment and lower poverty. The rich country benefits from cheaper consumer goods and services.

But there's a catch here. The above scenario had meant high-paying American jobs shipped to low-wage countries overseas. So, American jobs have been lost to some low-wage countries. This is apparent between developing countries and the US.

Take the case of India. India has greatly benefited from free trade. The information technology boom is largely export driven.

Until 1991, India was a closed economy. And its average annual growth rate was around 3.5%. Since the economy liberalised and opened for trade, growth rates have doubled. Millions were lifted out of poverty in the process.

The American presidential election has witnessed the rise of two unlikely candidates. Hillary Clinton and Donald Trump. The far left and the far right. But they do both agree on one important issue: free trade. More specifically, opposition to free trade. Opposition to trade agreements, and opposition to importing goods from lower wage countries.

So, if the next US president determines to restrict trade, the impact could be felt on Indian manufacturing and IT sector jobs. Only time will tell how things will pan out.

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