Private Financial Flows
These are financial flows that originate with non-governmental entities, such as individuals, charities, and private firms. In decreasing order of magnitude, there are four private financial flows: foreign direct investment, international bank loans, international portfolio investments, and international bonds.
You have made a series of choices as the Secretary of Economic Development of Kashmir. Let's analyze each of your choices.
The Beijing Consensus model of economic development maximizes state control on economic development through state capitalism. Many firms are state-owned enterprises. Kashmiri firms will rarely experience economic volatility because your government will bail out its key industries' firms when necessary. However, these firms will have less incentive to innovate and charge lower prices, so your domestic economy will not grow and improve as much over time as an unregulated liberal capitalist economy.
Import-substituting industrialization is a market-controlling strategy that avoids international economic linkages to support national champion firms instead. High tariffs decrease the importation of manufactured goods into Kashmir, while subsidies streamline domestic industrialization. In the short term, this strategy will result in solid growth and industrialization, but in the long term, the high tariff walls and subsidies will suppress incentives for national champion firms to innovate and charge lower prices. The subsidies will also slowly run up Kashmir's deficits and create a national debt.
Private financial flows will give your domestic firms access to foreign capital they can invest in development and innovation. In particular, foreign direct investment by multinational enterprises will drive domestic competition and bring technology, labor, capital, and managerial expertise to your domestic markets. International bank loans and international portfolio investments will help your firms in the short term, but the volatility of these financial flows will hurt the economic planning of these firms. Your domestic economy will surely grow, but the volatility of private financial flows could spur financial crises.
Overall, you have done a fair job as the Kashmiri economy will likely grow moderately, but your development choices lower Kashmiri growth's ceiling and leave you vulnerable to economic volatility.