Description
International trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance has been on the rise in recent centuries.
RESEARCH REPORTS ON INTERNATIONAL TRADE
CONTENTS
Introduction.......................................................................................................... 5-19 Theories of International Trade..........................................................................20-22 Objectives.............................................................................................................. 23 Review Of Literature............................................................................................ 24-29 Research Methodology........................................................................................... 30 Data Analysis..........................................................................................................31-32 Findings.................................................................................................................. 33 Bibliography........................................................................................................... 34
INTRODUCTION
International trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history (see slik Road, Amber Road), its economic, social, and political importance has been on the rise in recent centuries. Industrialization,advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing international trade is crucial to the continuance of globalization. Without international trade, nations would be limited to the goods and services produced within their own borders. International trade is, in principle, not different from domestic trade as the motivation and the behavior of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not. The main difference is that international trade is typically more costly than domestic trade. The reason is that a border typically imposes additional costs such as tariffs, time costs due to border delays and costs associated with country differences such as language, the legal system or culture. Global Competitiveness Index (2008-2009): competitiveness is an important determinant for the well-being of states in an international trade environment. International trade uses a variety of currencies, the most important of which are held as foreign reserves by governments andcentral banks. Here the percentage of global cummulative reserves held for each currency between 1995 and 2005 are shown: the US dollar is the most sought-after currency, with the Euro in strong demand as well. International trade is the exchange of capital, goods, and services across international borders or territories.[1] In most countries, such trade represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance has been on the rise in recent centuries. Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing
international trade is crucial to the continuance ofglobalization. Without international trade, nations would be limited to the goods and services produced within their own borders. International trade is, in principle, not different from domestic trade as the motivation and the behavior of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not. The main difference is that international trade is typically more costly than domestic trade. The reason is that a border typically imposes additional costs such as tariffs, time costs due to border delays and costs associated with country differences such as language, the legal system or culture. Another difference between domestic and international trade is that factors of production such as capital and laborare typically more mobile within a country than across countries. Thus international trade is mostly restricted to trade in goods and services, and only to a lesser extent to trade in capital, labor or other factors of production. Trade in goods and services can serve as a substitute for trade in factors of production. Instead of importing a factor of production, a country can import goods that make intensive use of that factor of production and thus embody it. An example is the import of laborintensive goods by the United States from China. Instead of importing Chinese labor, the United States imports goods that were produced with Chinese labor. One report in 2010 suggested that international trade was increased when a country hosted a network of immigrants, but the trade effect was weakened when the immigrants became assimilated into their new country. International trade is also a branch of economics, which, together with international finance, forms the larger branch of international economics.
Current members of the World Trade Organisation.
Traditionally trade was regulated through bilateral treaties between two nations. For centuries under the belief in mercantilism most nations had high tariffs and many restrictions on international trade. In the 19th century, especially in the United Kingdom, a belief in free trade became paramount.[citation needed] This belief became the dominant thinking among western nations since then. In the years since the Second World War, controversial multilateral treaties like the General Agreement on Tariffs and Trade (GATT) and World Trade Organization have attempted to promote free trade while creating a globally regulated trade structure. These trade agreements have often resulted in discontent and protest with claims of unfair trade that is not beneficial to developing countries. Free trade is usually most strongly supported by the most economically powerful nations, though they often engage in selectiveprotectionism for those industries which are strategically important such as the protective tariffs applied to agriculture by theUnited States and Europe.[citation needed] The Netherlands and the United Kingdom were both strong advocates of free trade when they were economically dominant, today the United
States, the United Kingdom, Australia and Japan are its greatest proponents. However, many other countries (such as India, China and Russia) are increasingly becoming advocates of free trade as they become more economically powerful themselves. As tariff levels fall there is also an increasing willingness to negotiate non tariff measures, including foreign direct investment, procurement and trade facilitation.[citation needed] The latter looks at the transaction cost associated with meeting trade and customs procedures. Traditionally agricultural interests are usually in favour of free trade while manufacturing sectors often support protectionism.[citation needed]This has changed somewhat in recent years, however. In fact, agricultural lobbies, particularly in the United States, Europe and Japan, are chiefly responsible for particular rules in the major international trade treaties which allow for more protectionist measures in agriculture than for most other goods and services. During recessions there is often strong domestic pressure to increase tariffs to protect domestic industries. This occurred around the world during the Great Depression. Many economists have attempted to portray tariffs as the underlining reason behind the collapse in world trade that many believe seriously deepened the depression. The regulation of international trade is done through the World Trade Organization at the global level, and through several other regional arrangements such as MERCOSUR in South America, the North American Free Trade Agreement (NAFTA) between the United States, Canada and Mexico, and the European Union between 27 independent states. The 2005 Buenos Aires talks on the planned establishment of the Free Trade Area of the Americas (FTAA) failed largely because of opposition from the populations of Latin American nations. Similar agreements such as the Multilateral Agreement on Investment (MAI) have also failed in recent years.
Risk in International Trade
While trade barriers and unfair practices take many forms, the most common examples are listed below: ? ? ? ? ? ? ? ? Intellectual property infringement - including copyright, patent and trademarks. Lack of competitive bidding for foreign government tenders. Competition from unfairly traded (i.e., dumped or foreign government subsidized) imports. Unfair and trade distortive subsidies provided by foreign governments to overseas competitors. Foreign trade remedy investigations conducted inconsistent with international obligations. Burden some certification and testing requirements that are not required by domestic manufacturers. Increasing imports and unfair competition. Concerns over other foreign trade barriers to export or investment.
Introduction to Direction of India's Foreign Trade
By direction of trade we mean the countries with which India keeps international trade relations. It also helps us to understand the diplomatic relations maintained by India with other countries in direction of trade. For the purpose of direction of trade, the countries to which India exports are broadly divided into following five groups
The group of countries to which India Exports are :Organisation for Economic Co-operation & Development (OECD) comprising of USA, Canada, European Union (EU), Australia and Japan. Organisation of Petroleum Exporting Countries (OPEC) which includes Kuwait, Iran, Iraq, Saudi Arabia and others. Eastern Europe which includes Romania, Russia and others. Developing Nations which includes China, Hong Kong, South Korea, Singapore and Malaysia.
A. Direction of India's Exports
The above table reveals following changes in India's Exports : 1. OECD The OECD group accounted for a major portion of India's exports. The share of this group was 56.4% in 1990-91 & 44.3% in 2005-06. About 45% of these exports have been to European Union (EU) countries.
2. OPEC
The share of OPEC which was 5.6% in 1990-91. In 2005-06 it has increased to 14.8% i.e. share of OPEC has been showing an upward trend since 1990-91.
3. Eastern Europe There was a rapid decrease in the share of Eastern Europe particularly U.S.S.R. Due to political problems & disintegration of the U.S.S.R, the share of Eastern Europe decreased from 17.9% in 1990-91 to 1.9% in 2005-06.
4. Developing Countries The share of developing nations increased from 17.1% in 1990-91 to 38.7% in 2005-06. Asian countries now account for 1/4th of India's export earnings. Among the Asian countries the major export destinations have been Hong Kong, Singapore & Thailand.
5. Other Countries The share of other countries has declined from 3.00% in 1990-91 to
0.3% in 2005-06.
Important Facts of India's Country Wise Exports
The share of U.K in India's exports declined from 26.9% in 1960-61 to 4.5% in 2004-05. The share of USA in India's exports was 16% in 1960-61 and it rose to 16.7% in 2004-05. India was dependent on U.K and U.S.A for 43% of its export earnings in 1960-61. US to be the single largest trading partner for India but with a declining trend. The share of U.S.S.R. (Russia) rose from 4.5% in 1960-61 to 18.3% in 1980-81 but declined to 0.8% in 2004-05 due to the disintegration of U.S.S.R. Between 1986-90, the first position was occupied by U.S.A, second position by U.S.S.R and the third position by Japan. The position changed markedly after the disintegration of U.S.S.R. In the recent years, export to East Asian Countries has increased, mainly Hong Kong, Singapore and Thailand. There has been a healthy growth of bilateral trade between India and China. In the first seven months of 2002-03, Indo-China bilateral trade expanded by 43.4%. China is the second largest trading partner for India next to USA.
Direction of India's Imports
Since the last decade, there has been a distinct shift in the direction of trade. The share of OECD countries both in exports & imports is on the decline. Eastern Europe is no more a major partner in our trade. Its share has reached the lowest among the group. The Asian developing countries are becoming important trade partners.
The above table reveals following changes in India's Imports :-
1. OECD - Organisation for Economic Co-operation and Development
The share of OECD in India's import expenditure declined from 54% in 1990-91 to 32.73% in 2005-06. Thus the importance of OECD declined over the period 1990-91 to 2005-06.
2. OPEC - Organisation of Petroleum Exportinq Countries OPEC mainly include Iran, Iraq, Kuwait and Saudi Arabia. The share of OPEC countries decreased from 16.3% in 1990-91 to 7.7% in 2005-06 mainly because of crude oil. There has been a change in the source of oil imports from OPEC to other countries.
3. Eastern Europe This includes mainly the former USSR. India's share of imports from Eastern Europe has also declined from 7.8% in 1990-91 to 2.6% in 2005-06. This is mainly due to decline in imports from Russia.
4. Developing Nations
This includes the developing countries of Africa, Asia, Latin America and Caribbean. The share of developing nations in India's import expenditure increased from 18.4% in 1990-91 to 25.9% in 2005-06.
5. Other Countries The share of other countries increased from 3.5% in 1990-91 to 31.1% in 2005-06.
Important Facts of India's Country Wise Imports
The share of U.S.A in India's imports was 29.2% and that of U.K was 19.4% in 1960-61. U.S.A. ranked first and U.K ranked the second. During the whole planning period, India has obtained maximum imports from U.S.A. With the emergence of new trading partners like Japan, Germany and Canada the dependence on U.K. declined. The share of U.K. in Indian imports declined from 19.4% in 1960-61 to 3.2% in 2004-05. Trade with Japan increased in absolute terms and India has now entered in to a number of collaborations with Japan. The percentage share of Japan has decreased from 5.4% in 196061 to 2.8% in 2004-05. Trade with USSR occupied the second place next to USA, during 1984. The share of USSR increased from 1.4% in 1960-61 to 10.4% in 1984-85. With the disintegration of USSR, the share of Russia fell to 1.2% in 2004-05. The directions has now changed markedly. The share of developing countries has constituted more than 1/4th of total imports in 2004-05 of these imports from Asian countries are most important.
Conclusion on Direction of India's Foreign Trade
Significant changes have taken place in the direction of India's foreign trade since 1991, and more particularly during the last two-three years. What's most significant is the emergence of China, Singapore, Hong Kong, South Korea & Malaysia as important trading partners of India from the Asian region, Switzerland from OECD countries, and UAE & Indonesia (which left OPEC in 2008) from OPEC countries. However, India should cultivate more trade relations with Africa, South America and MiddleEast Asian Countries as these rich countries would offer huge markets for India's export. The diversification of India's exports has fetched a cheaper source of imports and a bigger market for exports. India has established herself in the highly competitive world market in the recent years.
A. Composition of India's Exports Britishers strongly believed that India was a country well suited to supply raw materials and other primary goods and a good market place for British manufacturers. So at the time of our independence our exports were predominantly of primary goods and imports were of manufacturers. At the time of independence agricultural commodities and light manufactured consumer goods dominated India's export basket. During the post independence period India's composition of exports changed. Now exports of India's are broadly classified into following four categories.
Table below shows composition of India's export from 1990-91 to 2005-06
The composition of India's export can be summarised as follows :1. Agricultural and Allied Products The share of agriculture items in the total exports of India has declined between 1990-91 to 2005-06. The share of agriculture exports was 19.5% in 1990-91. It came down to about 10.2% in 2005-06. The top items of agriculture exports include :Fish Products, Rice, Oil Cakes, Fruits and Vegetables The most important export item in 'Agriculture and Allied products' group over the period 1991-92 to 2005-06 has been 'Fish and Fish Preparations'. From $ 585 millions in 1991-92 export earnings from fish and fish preparations rose to $ 1,589 millions in 2005-06. However, in percentage terms, their share fell slightly from 3.3 percent in 1991-92 to 1.5 percent in 2005-06.
As far as agricultural exports are concerned, a significant development during the period since 1991 has been the considerable exports of rice in certain year. In fact, exports of rice were as high as $ 1,366 millions in 1995-96 which was 4.3 percent of total export earning in that year. In 2005-06, exports of rice were worth $ 1,405 millions which was 1.4 percent of total export earning in that year. 2. Ores and Minerals The overall export performance of ores and minerals is not satisfactory. In percentage terms, the export performance of ores and mineral has increased from 4.4% in 199091 to 5.2% in 2005-06. A major share of ores and minerals exports comes from the export of iron ore. 3. Manufactured Goods The share of manufactured items in the total export earnings of India is on the increase. In 1990-91, the share of manufactured items in the total export earnings was about 73% of the total export earnings. In 2005-06, the share of manufactured items in the total export earnings of India remained stagnant at 72%. The top manufactured export items include :Engineering Goods, Gems and Jewellery, Chemicals and Allied products, and Readymade Garments The export of engineering goods increased from $ 2,234 millions in 1991-92 to $ 21,315 million in 2005-06. In percentage terms the share of engineering goods rose from 12.5% in 1991-92 to 20.7% in 2005-06. Over the period 1991-92 to 2002-03, engineering goods occupied the second position in India's export earnings after gems and jewellery. However, thereafter engineering goods have occupied the first place. In 2005-06 they contributed 20.7% (i.e. one-fifth) of total export earnings. For most of the period since 1991, largest export earnings came from the exports of gems and jewellery. The share of gems and jewellery in India's total export was 15.3% in 1991-92 and
15.1% in 2005-06. However, gems and jewellery industry is a highly import intensive industry requiring large amount of imports of pearls and precious stones. Exports of chemicals and allied products rose significantly from $ 1,583 millions in 1991-92 to $ 11,935 millions in 2005-06. In percentage terms, their share stood at 11.6% in 2005-06 and they occupied the third place in India's export earnings in this year. In percentage terms, readymade garments maintained an almost constant share all through the period since 1991. They contributed 12.3% of export earnings in 1991-92 and 12.5% of export earnings in 2000-01. In 2003-04, their share fell to 9.8% and in 2005-06 to 8.3%.
4. Mineral Fuel and Lubricants There has been an improvement in the export of mineral fuels and lubricants both in terms of value and in terms of percentage. In percentage terms, its share has increased from less than 2.9% in 1990-91 to 11.5% in 2005-06. Some other facts regarding structural change in India's export since 1991 are as follows :There are indication that during 1990s, some of Indian exports have moved upwards in value addition chain whereby instead of exporting raw materials, the country has switched over to export of processed goods. There were significant compositional shift within the major manufactured product groups such as engineering. goods, chemicals and allied products, etc.
B. Composition of India's Imports In 1947-48 the main items of India's imports were machineries, oil, grains, cotton, cutlery, hardware implements, chemicals, etc. They constituted 70% of India's imports. After that due to the emphasis on industrialisation during the second 5-Year plan necessitated the imports of capital goods. Now imports of India's are broadly classified into following four categories.
Table below shows composition of India's import from 1990-91 to 2005-06.
The composition of India's imports can be summarised as follows :-
1. Petroleum Products
Imports of petroleum oil and lubricants rose significantly from $ 5364 millions in 199192 to $ 43,963 millions i.e. more than eight times. Due to high price of crude oil, the POL imports jumped to $ 15,650 millions in 2000-01. In 1990-91, petroleum products accounted for nearly 25% of total imports of India. In 2005-06, it has further increased to nearly 31% of the total import bill of India.
2. Capital Goods
The imports of capital goods was $ 3,610 millions in 1991-92. In 1995-96 due to sharp rise in non-electrical machinery imports, the imports of capital goods jumped upto $ 8,458 millions. However due to slowing domestic demand imports of capital goods fell subsequently. The capital goods and related items were 24.1% of the total imports of India in 1990-91, which has come down slightly in 2005-06 to about 22.3%.
3. Pearls and Precious Stones
To meet the requirements of the gems & jewellery industry pearls and precious stones are imported in large quantities. In 1990-91, the share of pearls and precibus stones was 8.7% which has reduced in percentage terms to 6.4% in 2005-06.
4. Iron and Steel
The imports of iron and steel have declined over the years in percentage terms. In 1990-91, the share of iron and steel imports was 5%, which has come down to 3% in 2005-06. This is because, a good amount of iron ore is now extracted in India which has reduced imports.
5. Fertilizers
Import of fertilizers in 1991-92 stood at $ 954 millions. In 2003-04 expenditure on import of fertilizers was $ 635 millions. The import of fertilizers have declined, which indicates less dependence of India on imported fertilizers. The share in total imports of fertilizers was 4.1% in 1990-91, which came down to 1.5% in 2005-06.
Conclusion on India's Foreign Trade
Composition of India's foreign trade has undergone a positive change. It is a remarkable achievement that India have transformed itself from a predominantly primary goods exporting country into a non-primary goods exporting country. Under import too India's dependence on food grains and capital goods has declined.
What are the major causes for the change in Composition of Exports in India? 1. Decline in Percentage Share of Agricultural Products:
After independence, the percentage share of agricultural products in total exports has considerably declined. For instance, in 1970-71, agricultural products contributed 31% in total export earnings which in 2001-02 declined to 14.9%.
2. Decline in the Share of Conventional Items:
Before independence, conventional items comprise of Jute, tea, food grains and minerals contributed more than 41%. But in 2001-02, the share of these items taken together has come down to 16.7%. The main reasons for the decline are an increase in abnormal demand of food grains and raw materials due to an increase in population.
3. Increase in Share of Manufactured Goods:
After independence, the share of manufactured goods in the total export earnings has considerably increased. In the financial year of 1970-71, the share of manufactured goods was 56% which in 2001-02 rose to 81.6%.
4. Increase in the Share of Petroleum Products and Minerals:
The percentage share of export earning in the total earnings is only 0.1 percent while share of minerals has been recorded to be 2.4 respectively in 2001-02. 5. Increase in the Export of Gems and Readymade Garments: Exports of gems and readymade garments had emerged as an important foreign exchange earner in recent years. The exports of gems enjoy the first place as of ready made garments, the second in the total export earnings of the country.
THEORIES OF IT
Introduction
In the 1600 and 1700 centuries, mercantilism stressed that countries should simultaneously encourage exports and discourage imports. Although mercantilism is an old theory it echoes in modern politics and trade policies of many countries. The neoclassical economist Adam Smith, who developed the theory of absolute advantage, was the first to explain why unrestricted free trade is beneficial to a country. Smith argued that 'the invisible hand' of the market mechanism, rather than government policy, should determine what a country imports and what it exports. Two theories have been developed from Adam Smith's absolute advantage theory. The first is the English neoclassical economist David Ricardo's comparative advantage. Two Swedish economists, Eli Hecksher and Bertil Ohlin, develop the second theory. The Heckscher-Ohlin theory is preferred on theoretical grounds, but in real-world international trade pattern it turned out not to be easily transferred, referred to as the Leontief paradox. Another theory trying to explain the failure of the Hecksher-Ohlin theory of international trade was the product life cycle theory developed by Raymond Vernon.
Mercantilism
According to Wild, 2000, the trade theory that states that nations should accumulate financial wealth, usually in the form of gold, by encouraging exports and discouraging imports is called mercantilism. According to this theory other measures of countries' well being, such as living standards or human development, are irrelevant. Mainly Great Britain, France, the Netherlands, Portugal and Spain used mercantilism during the 1500s to the late 1700s. Mercantilistic countries practised the so-called zero-sum game, which meant that world wealth was limited and that countries only could increase their share at expense of their
neighbours. The economic development was prevented when the mercantilistic countries paid the colonies little for export and charged them high price for import. The main problem with mercantilism is that all countries engaged in export but was restricted from import, another prevention from development of international trade.
Absolute Advantage
The Scottish economist Adam Smith developed the trade theory of absolute advantage in 1776. A country that has an absolute advantage produces greater output of a good or service than other countries using the same amount of resources. Smith stated that tariffs and quotas should not restrict international trade; it should be allowed to flow according to market forces. Contrary to mercantilism Smith argued that a country should concentrate on production of goods in which it holds an absolute advantage. No country would then need to produce all the goods it consumed. The theory of absolute advantage destroys the mercantilistic idea that international trade is a zero-sum game. According to the absolute advantage theory, international trade is a positive-sum game, because there are gains for both countries to an exchange. Unlike mercantilism this theory measures the nation's wealth by the living standards of its people and not by gold and silver. There is a potential problem with absolute advantage. If there is one country that does not have an absolute advantage in the production of any product, will there still be benefit to trade, and will trade even occur? The answer may be found in the extension of absolute advantage, the theory of comparative advantage.
Comparative Advantage
The most basic concept in the whole of international trade theory is the principle of comparative advantage, first introduced by David Ricardo in 1817. It remains a major influence on much international trade policy and is therefore important in understanding the modern global economy. The principle of comparative advantage states that a country should specialise in producing and exporting those products in which is has a comparative, or relative cost, advantage compared with other countries and should import those goods in which it has a comparative disadvantage. Out of such specialisation, it is argued, will accrue greater benefit for all. In this theory there are several assumptions that limit the real-world application. The assumption that countries are driven only by the maximisation of production and consumption, and not by issues out of concern for workers or consumers is a mistake.
Heckscher-Ohlin Theory
In the early 1900s an international trade theory called factor proportions theory emerged by two Swedish economists, Eli Heckscher and Bertil Ohlin. This theory is also called the Heckscher-Ohlin theory. The Heckscher-Ohlin theory stresses that countries should produce and export goods that require resources (factors) that are abundant and import goods that require resources in short supply. This theory differs from the theories of comparative advantage and absolute advantage since these theory focuses on the productivity of the production process for a particular good. On the contrary, the Heckscher-Ohlin theory states that a country should specialise production and export using the factors that are most abundant, and thus the cheapest. Not produce, as earlier theories stated, the goods it produces most efficiently. The Heckscher-Ohlin theory is preferred to the Ricardo theory by many economists, because it makes fewer simplifying assumptions. In 1953, Wassily Leontief published a study, where he tested the validity of the Heckscher-Ohlin theory. The study showed that the U.S was more abundant in capital compared to other countries, therefore the U.S would export capital- intensive goods and import labour-intensive goods. Leontief found out that the U.S's export was less capital intensive than import.
Product Life Cycle Theory
Raymond Vernon developed the international product life cycle theory in the 1960s. The international product life cycle theory stresses that a company will begin to export its product and later take on foreign direct investment as the product moves through its life cycle. Eventually a country's export becomes its import. Although the model is developed around the U.S, it can be generalised and applied to any of the developed and innovative markets of the world. The product life cycle theory was developed during the 1960s and focused on the U.S since most innovations came from that market. This was an applicable theory at that time since the U.S dominated the world trade. Today, the U.S is no longer the only innovator of products in the world. Today companies design new products and modify them much quicker than before. Companies are forced to introduce the products in many different markets at the same time to gain cost benefits before its sales declines. The theory does not explain trade patterns of today.
Summary
Mercantilism proposed that a country should try to export more than it imports, in order to receive gold. The main criticism of mercantilism is that countries are restricted from import, a prevention of international trade. Adam Smith developed the theory of absolute advantage that stressed that a country should produce goods or services if it uses a lesser amount of resources than other countries. David Ricardo stated in his theory of comparative advantage that a country should specialise in producing and exporting products in which it has a comparative advantage and it should import goods in which it has a comparative disadvantage. Hecksher-Ohlin's theory of factor endowments stressed that a country should produce and export goods that require resources (factors) that are abundant in the home country. Leontief tested the Hecksher-Ohlin theory in the U.S. and found that it was not applicable in the U.S. Raymond Vernon's product life cycle theory stresses that a company will begin to export its product and later take on foreign direct investment as the product moves through its life cycle. Eventually a country's export becomes its import.
OBJECTIVES OF THE STUDY OF INTERNATIONAL TRADE ITS DIRECTION AND COMPOSITION
? To find out the direction and composition of Indian Export and Import. ? To find out the list of countries India Trades with. ? To collect the data of Import and Export values of India.
REVIEW OF LITERATURE
Mukherji Indra Nath (2011)In this paper he makes an attempt to explain the trend in bilateral trade between the two countries. He points out that barring setbacks in certain years, the bilateral trade between the two countries has been growing steadily. He notes that even though Nepal has been able to diversify its trade with India, its trade deficit with India has been increasing sharply, and its export earnings are barely sufficient to meet the cost of imports of petroleum products from India.This paper identifies products with high trade potential of both the countries so that these could be targeted in trade facilitation measures or when mutual recognition of each country’s certification is accepted by the other. Realizing the close linkage between trade and investment, this paper examines the volume and status of Indian foreign direct investments in Nepal. An exercise in intra-industry trade between the two countries gives direction for sectors/industries in which Indian investment could flow. This paper published by Mr.Mukherji expresses concern about the labour situation in Nepal and the lack of arbitration tribunals in case of dispute. Quite a number of Indian industries have been shut down and those in the pipeline could also be adversely affected. In this context the need for long-pending Bilateral Investment Treaty (BIT) has been emphasized.
Chaney Thomas (2011): Under this research paper Mr.Thomas determines the gravity equation in international trade is one of the most robust empirical ?nding in economics: bilateral trade between two countries is proportional to their respective sizes, measured by their GDP, and inversely proportional to the geographic distance between them.While the
role of economic size is well understood, the role played by distance remains a mystery. In this paper, He propose the ?rst explanation for the gravity equation in international trade. This explanation is based on the emergence of a stable international network of importers and exporters. Firms can only export into markets in which they have a contact. They acquire contacts by gradually meeting the contacts of their contacts.He show that if, as observed empirically, (i) (ii) the distribution of the number of foreign countries accessed by exporters is fattailed there is a large turnover in exports, with ?rms often going in and out of individual foreign markets, and (iii) geographic distance hinders the initial acquisition of contactsin an arbitrary way, then trade is proportional to country size, and inversely proportional todistance. Data on ?rm level, sectoral, and aggregate trade support further predictions of the model.
Ma Jing, Lu Yuduo (2011):In this paper his main purpose is to , firstly explain the reason of international trade according to recent theories; secondly, collect several sorts of opinions about free trade and protectionism referring to relevant literatures; thirdly describe export barriers in different aspects, such as natural barriers and artificial barriers; lastly from trade regulation perspective introduce WTO as a tool of promoting international trade.
Sen Sunanda (2010): In this research paper she provides a survey of the literature on trade theory, from the classical example of comparative advantage to the New Trade theories currently used by many advanced countries to direct industrial policy and trade. An account is provided of the neo-classical brand of reciprocal demand and resource endowment theories, along with their usual empirical verifications and logical critiques. A useful supplement is provided in terms of Staffan Linder’s theory of “overlapping demand,” which provides an explanation of trade structure in terms of aggregate demand. Attention is drawn to new developments in trade theory, with strategic trade providing inputs to industrial policy. Issues relating to trade, growth, and development are dealt with separately, supplemented by an account of the neo-Marxist versions of trade and underdevelopment.
Pooja Sharma (2010): This paper looks at international trade governance, which is taken to consist of the set of institutions and organisational structures that determine the formulation and enforcement of rules and the associated negotiations over policies. We first distinguish two forms of trade governance: regional arrangements and a global system of trade governance. The paper then proposes a framework for understanding the coexistence of these alternative forms of trade governance based on their major economic governance characteristics. We assess the nature of the two trade governance modes and compare and contrast them along their main institutional characteristics. The global mode may be characterised as largely rule-based in contrast to the regional mode, which is relationship-based with flexibility in incorporation of rules. We argue that countries may simultaneously engage in different modes of trade liberalisation due both to their trade and income, as well as, governance implications, including the interplay between alternative modes of governance.
Holger Breinlich,Chiara Criscuolo(2010): They provide a novel set of stylized facts on Örms engaging in international trade in services, using unique data on Örm-level exports and imports from the worldís second largest services exporter, the United Kingdom (UK). They show that only a fraction of UK Örms engage in international trade in services, that trade participation varies widely across industries and that services traders are different from non-traders in terms of size, productivity and other Örm characteristics. They also provide detailed evidence on the trading patterns of services exporters and importers, such as the number of markets served, the value of exports and imports per market and the share of individual markets in overall sales. They interpret these facts in the light of existing theories of international trade in services and goods. Our results demonstrate that Örm-level heterogeneity is a key feature of services trade. Also, they many similarities between services and goods trade at the Örm level and conclude that existing heterogeneous Örm models for goods trade will be a good starting point for explaining trade in services as well.
Chen Huan (2009): Under this research paper he determines the relationship between foreign trade and economic growth. On this issue, he at home and abroad used the relative data of china and got different conclusions by different methods. At first, this thesis reviews
the theories of the relationship between foreign trade and economic growth, and then sum up the main arguments of modern empirical economics. Finally, He makes a brief comment and put forward some questions that should be explored in depth in this area. He provides a broader and more comprehensive perspective to the later researchers.
P.Swan G.M(2009): In this paper Mr.Swan reviews the body of empirical work that has investigated the specific question: How international standards impact on international trade? Do they help or hinder trade? The work reviewed ranges from econometric studies using a variety of measures of standards derived from e.g. the Perinorm database, diffusion of ISO9000, regional agreements, mutual recognition agreements and harmonisation, to surveys of exporting firms. A mapping of the findings from econometric models shows that there is often, but not always, a positive relationship between international standards and exports or imports, which is in line with the widely held view that international standards are supportive of trade. For national (i.e. country-specific) standards studies find positive as well as negative effects on trade and thus provide only qualified support for the commonly held view that national standards create barriers to trade. Overall, this literature reviewed does not provide a single answer to the question of trade effects, and the explanation for this appears to have to do with how the multiple economic effects of standards interact. This paper summarises some of the existing empirical evidence for some of these effects, which include network externalities, variety, knowledge, quality and trust, and which merit further research in order to understand when standards help trade, and when not.
Sova Ana Maria ,Sova Robert,Rault Christopher(2008): This article deals with econometric developments for the estimation of gravity model, which allow to get convergent parameter estimates even when a correlation exists between the explanatory variables and the specific unobservable characteristics of each individual. They implement panel data econometric techniques to characterize bilateral trade flows between heterogeneous
economies. Their econometric results based on a sample of 4 Central and Eastern European countries (CEEC-4) and 19 OECD countries over a 18-year period highlight the importance by taking into account the unobservable heterogeneity to obtain a robust empirical specification and unbiased coefficients.
Thoenig Mathias,Mayer Thierry,Martin Philippe (2007): This paper analyzes empirically the relationship between civil wars and international trade. They ?rst show that trade destruction due to civil wars is very large and persistent and increases with the severity of the con?ict . Then they identify two e?ects that trade can have on the risk of civil con?icts:it may act as a deterrent if trade gains are put at risk during civil wars butit may also act as an insurance if international trade provides a substituteto internal trade during civil wars. They ?nd support for the presence ofthese two mechanisms and conclude that trade openness may deter the most severe civil wars (those that destroy the largest amount of trade) but may increase the risk of lower scale con?icts.
CHAND RAMESH (2006): Under this research paper he concentrates more on Agriculture. Agriculture contributes substantially to output and employment in South Asian countries. Therefore, any change, like trade liberalization, those impacts on the agriculture sector has widespread ramifications in terms of employment, nutrition, livelihood and food security. Implementation of various provisions of the WTO Agreement on Agriculture causes serious concern with regard to the performance of the agriculture sector and food security, and these countries have become quite sensitive to consequences of future WTO agreements. The cautious approach towards the WTO is mainly caused by the increased dependence on food imports and deterioration in self-reliance in agriculture in the post-WTO period because of a much higher growth in food import as compared to exports. Decline in international prices and trade distortions are the underlying causes for an adverse impact on agriculture during the post-WTO period. South Asian countries should address these two issues in future negotiations PONCET Sandra(2002): In this paper, they rely on a new set of provincial trade flow to analyze and compare the magnitudeand evolution of Chinese provinces’ engagement in domestic and international trade by computingall-inclusive indicators of trade barriers. They find that Chinese provinces’ greater involvement ininternational trade went hand in hand with a decrease in domestic trade flow intensity between 1987and 1997. Even if Chinese provinces still rely more on goods from the rest of China than oninternational imports, provincial borders matter more and more inside the country in the sense that they imply greater discontinuities in the Chinese domestic market.
Strutt Anna, Poot Jacques, Dubbeldam Jason: Under this research paper they examines the international and New Zealand literatures on the two-way interaction between international migration and agreements designed to enhance cross-border trade or investment. Benefits and costs of migration, to the extent that these may feature in trade and migration negotiations, are discussed. While trade and migration can be substitutes in some contexts, they will be complements in other contexts. Liberalisation of services and the movement of people are likely to offer much more significant gains than liberalisation of remaining barriers to goods trade. Significant scope for liberalisation under GATS mode 4 (the movement of natural persons) may remain. However, temporary migration is already promoted on a unilateral and bilateral basis within immigration policy frameworks that may provide greater flexibility than GATS mode 4. With respect to both trade and migration, the more diverse the exchanging countries are, the greater the economic benefits tend to be. However, greater diversity may also imply greater social costs. This paradox of diversity needs to be addressed through appropriate social policies accompanying enhanced temporary and permanent migration.
Cox Larry W :This paper reviews 51 international entrepreneurship articles gleaned from the ABI /Inform database of business citations. It divides the articles into four categories: (a) individual entrepreneurs and their traits, (b) entrepreneurial processes, (c) environmental factors, and (d)small and entrepreneurial ventures. They suggests that there is much room for further research,particularly in cross-national comparisons of individual entrepreneurs, and entrepreneurialprocesses.
Guillaume Daudin, Jean-Luc Gaffard and Francesco Saraceno : This paper presents a critical survey of the literature on trade openness. In the first part they start by analyzing distributive domestic issues that arise following changing trade patterns. They identify the sources of the problems, and assess the technical and political feasibility of measures aimed at solving them. Then they examine the distribution of trade gains among countries. They highlight situations in which asymmetric productivity gains may lead to conflicts between
countries despite an increase in global welfare. The second part shifts the focus on dynamic consequences of trade. They begin by the theoretical arguments on the link between trade openness and growth. Then they explore the tentative empirical arguments. Finally, they highlight the importance of transition processes that affects economies experiencing changes in international trade patterns. The paper concludes with a discussion of appropriate policy measures.
RESEARCH METHODOLOGY
? Research Methodology:To carry out the study the following research methodology has been adopted? Data collection:The study is based on Secondary data only. Books: Mishra & Puri (from pg no.553-563) only introduction part. Internet: -Websites: ? ? ? ? ? http://en.wikipedia.org/wiki/International_trade httpcommerce.nic.intradestatsIndiastrade_press.pdf httpwww.unescap.orgtidartnetmtgtdgc_iift.pdf http://www.fao.org/DOCREP/004/Y1669E/y1669e02.htm#TopOfPage http://www.indiainfoline.com/Markets/News/Indias-Foreign-TradeFebruary-2012/5388939941 ? http://www.cybex.in/Exim-News/India-S-Foreign-Trade-February3344.aspx ? http://commerce.nic.in/ann/RFD_2011_12.pdf ? Sampling: Convienient Sampling is used. ? Sample Design: Descriptive Design. ? Data Processing and Data Analysis: Tables,Bar Charts and percentages.
DATA ANALYSIS
Foreign Trade statics 2003-04 onwards yearly
YEAR 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
2009-10
2010-11
EXPORT 63843 83536 103091 126361 162904 185295 178751 240677
IMPORT 78149 111517 149166 185149 251439 303696 288373 345905
TRADE BALANCE -14307 -27981 -46075 -59388 -88535 -118401 -109621 -105229
400,000 300,000 200,000 100,000 0 -100,000 -200,000
export Import Trade balance
Fig.no.1
INTERPRETATION: ? In year 2003-04,Export rate of India is 63,843$ and Import rate is 78,149$. ? After 3 year in year 2006-07,the Export rate is increased by 1,26,361$ and Import rate is increased by 1,85,149$. ? In year 2010-11,the Export rate is increased by 2,40,677$ and Import rate is increased by 3,45,9054. Import of India is higher than Export of India as shown in the graph that is why the Trade balance is in negative(-) form. Foreign Trade 2007-08 onwards Monthly 2010-11
Month April May June July August September October November December January February March Export 17742 16531 19948 16142 16854 18204 17930 21489 22500 20605 23597 29135 Import 28770 26550 25883 26681 27044 29512 32462 28842 25130 28587 31701 34743 Trade balance -11028 -10019 -5935 -10539 -10190 -11308 -14532 -7353 -2630 -7982 -8104 -5608
40000 30000 20000 Export 2010-11 10000 0 -10000 -20000 Import 2010-11 Balance 2010-11
Fig.no.2 INTERPRETATION: ? From April 2010-March 2011,the Export rate is fluctuating at a increasing rate from 17,742$ to 29,135$ and Import rate is also fluctuating at a increasing rate from 28,770$ to 34,743$. Import of India is higher than Export of India as shown in the graph that is why the Trade balance is in negative(-) form
FINDINGS
? Import is higher than export in all Trades, and this is the main reason of the negativity of the Trade Balances
Composition of India’s Import & Export ? Petroleum commodities are the most imported items in India i;e.,30.9% in the year 2010-11. ? Manufactured goods covers the highest % of the India’s exported items i;e.,72% in the year 2010-11.
Direction of India’s Import & Export ? 32.73% of india’s import in 2010-11 had been imported by OECD’S. ? 44.3% of India’s export in 2010-11 had been exported to OECD’S
doc_908313055.docx
International trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance has been on the rise in recent centuries.
RESEARCH REPORTS ON INTERNATIONAL TRADE
CONTENTS
Introduction.......................................................................................................... 5-19 Theories of International Trade..........................................................................20-22 Objectives.............................................................................................................. 23 Review Of Literature............................................................................................ 24-29 Research Methodology........................................................................................... 30 Data Analysis..........................................................................................................31-32 Findings.................................................................................................................. 33 Bibliography........................................................................................................... 34
INTRODUCTION
International trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history (see slik Road, Amber Road), its economic, social, and political importance has been on the rise in recent centuries. Industrialization,advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing international trade is crucial to the continuance of globalization. Without international trade, nations would be limited to the goods and services produced within their own borders. International trade is, in principle, not different from domestic trade as the motivation and the behavior of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not. The main difference is that international trade is typically more costly than domestic trade. The reason is that a border typically imposes additional costs such as tariffs, time costs due to border delays and costs associated with country differences such as language, the legal system or culture. Global Competitiveness Index (2008-2009): competitiveness is an important determinant for the well-being of states in an international trade environment. International trade uses a variety of currencies, the most important of which are held as foreign reserves by governments andcentral banks. Here the percentage of global cummulative reserves held for each currency between 1995 and 2005 are shown: the US dollar is the most sought-after currency, with the Euro in strong demand as well. International trade is the exchange of capital, goods, and services across international borders or territories.[1] In most countries, such trade represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance has been on the rise in recent centuries. Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing
international trade is crucial to the continuance ofglobalization. Without international trade, nations would be limited to the goods and services produced within their own borders. International trade is, in principle, not different from domestic trade as the motivation and the behavior of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not. The main difference is that international trade is typically more costly than domestic trade. The reason is that a border typically imposes additional costs such as tariffs, time costs due to border delays and costs associated with country differences such as language, the legal system or culture. Another difference between domestic and international trade is that factors of production such as capital and laborare typically more mobile within a country than across countries. Thus international trade is mostly restricted to trade in goods and services, and only to a lesser extent to trade in capital, labor or other factors of production. Trade in goods and services can serve as a substitute for trade in factors of production. Instead of importing a factor of production, a country can import goods that make intensive use of that factor of production and thus embody it. An example is the import of laborintensive goods by the United States from China. Instead of importing Chinese labor, the United States imports goods that were produced with Chinese labor. One report in 2010 suggested that international trade was increased when a country hosted a network of immigrants, but the trade effect was weakened when the immigrants became assimilated into their new country. International trade is also a branch of economics, which, together with international finance, forms the larger branch of international economics.
Current members of the World Trade Organisation.
Traditionally trade was regulated through bilateral treaties between two nations. For centuries under the belief in mercantilism most nations had high tariffs and many restrictions on international trade. In the 19th century, especially in the United Kingdom, a belief in free trade became paramount.[citation needed] This belief became the dominant thinking among western nations since then. In the years since the Second World War, controversial multilateral treaties like the General Agreement on Tariffs and Trade (GATT) and World Trade Organization have attempted to promote free trade while creating a globally regulated trade structure. These trade agreements have often resulted in discontent and protest with claims of unfair trade that is not beneficial to developing countries. Free trade is usually most strongly supported by the most economically powerful nations, though they often engage in selectiveprotectionism for those industries which are strategically important such as the protective tariffs applied to agriculture by theUnited States and Europe.[citation needed] The Netherlands and the United Kingdom were both strong advocates of free trade when they were economically dominant, today the United
States, the United Kingdom, Australia and Japan are its greatest proponents. However, many other countries (such as India, China and Russia) are increasingly becoming advocates of free trade as they become more economically powerful themselves. As tariff levels fall there is also an increasing willingness to negotiate non tariff measures, including foreign direct investment, procurement and trade facilitation.[citation needed] The latter looks at the transaction cost associated with meeting trade and customs procedures. Traditionally agricultural interests are usually in favour of free trade while manufacturing sectors often support protectionism.[citation needed]This has changed somewhat in recent years, however. In fact, agricultural lobbies, particularly in the United States, Europe and Japan, are chiefly responsible for particular rules in the major international trade treaties which allow for more protectionist measures in agriculture than for most other goods and services. During recessions there is often strong domestic pressure to increase tariffs to protect domestic industries. This occurred around the world during the Great Depression. Many economists have attempted to portray tariffs as the underlining reason behind the collapse in world trade that many believe seriously deepened the depression. The regulation of international trade is done through the World Trade Organization at the global level, and through several other regional arrangements such as MERCOSUR in South America, the North American Free Trade Agreement (NAFTA) between the United States, Canada and Mexico, and the European Union between 27 independent states. The 2005 Buenos Aires talks on the planned establishment of the Free Trade Area of the Americas (FTAA) failed largely because of opposition from the populations of Latin American nations. Similar agreements such as the Multilateral Agreement on Investment (MAI) have also failed in recent years.
Risk in International Trade
While trade barriers and unfair practices take many forms, the most common examples are listed below: ? ? ? ? ? ? ? ? Intellectual property infringement - including copyright, patent and trademarks. Lack of competitive bidding for foreign government tenders. Competition from unfairly traded (i.e., dumped or foreign government subsidized) imports. Unfair and trade distortive subsidies provided by foreign governments to overseas competitors. Foreign trade remedy investigations conducted inconsistent with international obligations. Burden some certification and testing requirements that are not required by domestic manufacturers. Increasing imports and unfair competition. Concerns over other foreign trade barriers to export or investment.
Introduction to Direction of India's Foreign Trade
By direction of trade we mean the countries with which India keeps international trade relations. It also helps us to understand the diplomatic relations maintained by India with other countries in direction of trade. For the purpose of direction of trade, the countries to which India exports are broadly divided into following five groups
The group of countries to which India Exports are :Organisation for Economic Co-operation & Development (OECD) comprising of USA, Canada, European Union (EU), Australia and Japan. Organisation of Petroleum Exporting Countries (OPEC) which includes Kuwait, Iran, Iraq, Saudi Arabia and others. Eastern Europe which includes Romania, Russia and others. Developing Nations which includes China, Hong Kong, South Korea, Singapore and Malaysia.
A. Direction of India's Exports
The above table reveals following changes in India's Exports : 1. OECD The OECD group accounted for a major portion of India's exports. The share of this group was 56.4% in 1990-91 & 44.3% in 2005-06. About 45% of these exports have been to European Union (EU) countries.
2. OPEC
The share of OPEC which was 5.6% in 1990-91. In 2005-06 it has increased to 14.8% i.e. share of OPEC has been showing an upward trend since 1990-91.
3. Eastern Europe There was a rapid decrease in the share of Eastern Europe particularly U.S.S.R. Due to political problems & disintegration of the U.S.S.R, the share of Eastern Europe decreased from 17.9% in 1990-91 to 1.9% in 2005-06.
4. Developing Countries The share of developing nations increased from 17.1% in 1990-91 to 38.7% in 2005-06. Asian countries now account for 1/4th of India's export earnings. Among the Asian countries the major export destinations have been Hong Kong, Singapore & Thailand.
5. Other Countries The share of other countries has declined from 3.00% in 1990-91 to
0.3% in 2005-06.
Important Facts of India's Country Wise Exports
The share of U.K in India's exports declined from 26.9% in 1960-61 to 4.5% in 2004-05. The share of USA in India's exports was 16% in 1960-61 and it rose to 16.7% in 2004-05. India was dependent on U.K and U.S.A for 43% of its export earnings in 1960-61. US to be the single largest trading partner for India but with a declining trend. The share of U.S.S.R. (Russia) rose from 4.5% in 1960-61 to 18.3% in 1980-81 but declined to 0.8% in 2004-05 due to the disintegration of U.S.S.R. Between 1986-90, the first position was occupied by U.S.A, second position by U.S.S.R and the third position by Japan. The position changed markedly after the disintegration of U.S.S.R. In the recent years, export to East Asian Countries has increased, mainly Hong Kong, Singapore and Thailand. There has been a healthy growth of bilateral trade between India and China. In the first seven months of 2002-03, Indo-China bilateral trade expanded by 43.4%. China is the second largest trading partner for India next to USA.
Direction of India's Imports
Since the last decade, there has been a distinct shift in the direction of trade. The share of OECD countries both in exports & imports is on the decline. Eastern Europe is no more a major partner in our trade. Its share has reached the lowest among the group. The Asian developing countries are becoming important trade partners.
The above table reveals following changes in India's Imports :-
1. OECD - Organisation for Economic Co-operation and Development
The share of OECD in India's import expenditure declined from 54% in 1990-91 to 32.73% in 2005-06. Thus the importance of OECD declined over the period 1990-91 to 2005-06.
2. OPEC - Organisation of Petroleum Exportinq Countries OPEC mainly include Iran, Iraq, Kuwait and Saudi Arabia. The share of OPEC countries decreased from 16.3% in 1990-91 to 7.7% in 2005-06 mainly because of crude oil. There has been a change in the source of oil imports from OPEC to other countries.
3. Eastern Europe This includes mainly the former USSR. India's share of imports from Eastern Europe has also declined from 7.8% in 1990-91 to 2.6% in 2005-06. This is mainly due to decline in imports from Russia.
4. Developing Nations
This includes the developing countries of Africa, Asia, Latin America and Caribbean. The share of developing nations in India's import expenditure increased from 18.4% in 1990-91 to 25.9% in 2005-06.
5. Other Countries The share of other countries increased from 3.5% in 1990-91 to 31.1% in 2005-06.
Important Facts of India's Country Wise Imports
The share of U.S.A in India's imports was 29.2% and that of U.K was 19.4% in 1960-61. U.S.A. ranked first and U.K ranked the second. During the whole planning period, India has obtained maximum imports from U.S.A. With the emergence of new trading partners like Japan, Germany and Canada the dependence on U.K. declined. The share of U.K. in Indian imports declined from 19.4% in 1960-61 to 3.2% in 2004-05. Trade with Japan increased in absolute terms and India has now entered in to a number of collaborations with Japan. The percentage share of Japan has decreased from 5.4% in 196061 to 2.8% in 2004-05. Trade with USSR occupied the second place next to USA, during 1984. The share of USSR increased from 1.4% in 1960-61 to 10.4% in 1984-85. With the disintegration of USSR, the share of Russia fell to 1.2% in 2004-05. The directions has now changed markedly. The share of developing countries has constituted more than 1/4th of total imports in 2004-05 of these imports from Asian countries are most important.
Conclusion on Direction of India's Foreign Trade
Significant changes have taken place in the direction of India's foreign trade since 1991, and more particularly during the last two-three years. What's most significant is the emergence of China, Singapore, Hong Kong, South Korea & Malaysia as important trading partners of India from the Asian region, Switzerland from OECD countries, and UAE & Indonesia (which left OPEC in 2008) from OPEC countries. However, India should cultivate more trade relations with Africa, South America and MiddleEast Asian Countries as these rich countries would offer huge markets for India's export. The diversification of India's exports has fetched a cheaper source of imports and a bigger market for exports. India has established herself in the highly competitive world market in the recent years.
A. Composition of India's Exports Britishers strongly believed that India was a country well suited to supply raw materials and other primary goods and a good market place for British manufacturers. So at the time of our independence our exports were predominantly of primary goods and imports were of manufacturers. At the time of independence agricultural commodities and light manufactured consumer goods dominated India's export basket. During the post independence period India's composition of exports changed. Now exports of India's are broadly classified into following four categories.
Table below shows composition of India's export from 1990-91 to 2005-06
The composition of India's export can be summarised as follows :1. Agricultural and Allied Products The share of agriculture items in the total exports of India has declined between 1990-91 to 2005-06. The share of agriculture exports was 19.5% in 1990-91. It came down to about 10.2% in 2005-06. The top items of agriculture exports include :Fish Products, Rice, Oil Cakes, Fruits and Vegetables The most important export item in 'Agriculture and Allied products' group over the period 1991-92 to 2005-06 has been 'Fish and Fish Preparations'. From $ 585 millions in 1991-92 export earnings from fish and fish preparations rose to $ 1,589 millions in 2005-06. However, in percentage terms, their share fell slightly from 3.3 percent in 1991-92 to 1.5 percent in 2005-06.
As far as agricultural exports are concerned, a significant development during the period since 1991 has been the considerable exports of rice in certain year. In fact, exports of rice were as high as $ 1,366 millions in 1995-96 which was 4.3 percent of total export earning in that year. In 2005-06, exports of rice were worth $ 1,405 millions which was 1.4 percent of total export earning in that year. 2. Ores and Minerals The overall export performance of ores and minerals is not satisfactory. In percentage terms, the export performance of ores and mineral has increased from 4.4% in 199091 to 5.2% in 2005-06. A major share of ores and minerals exports comes from the export of iron ore. 3. Manufactured Goods The share of manufactured items in the total export earnings of India is on the increase. In 1990-91, the share of manufactured items in the total export earnings was about 73% of the total export earnings. In 2005-06, the share of manufactured items in the total export earnings of India remained stagnant at 72%. The top manufactured export items include :Engineering Goods, Gems and Jewellery, Chemicals and Allied products, and Readymade Garments The export of engineering goods increased from $ 2,234 millions in 1991-92 to $ 21,315 million in 2005-06. In percentage terms the share of engineering goods rose from 12.5% in 1991-92 to 20.7% in 2005-06. Over the period 1991-92 to 2002-03, engineering goods occupied the second position in India's export earnings after gems and jewellery. However, thereafter engineering goods have occupied the first place. In 2005-06 they contributed 20.7% (i.e. one-fifth) of total export earnings. For most of the period since 1991, largest export earnings came from the exports of gems and jewellery. The share of gems and jewellery in India's total export was 15.3% in 1991-92 and
15.1% in 2005-06. However, gems and jewellery industry is a highly import intensive industry requiring large amount of imports of pearls and precious stones. Exports of chemicals and allied products rose significantly from $ 1,583 millions in 1991-92 to $ 11,935 millions in 2005-06. In percentage terms, their share stood at 11.6% in 2005-06 and they occupied the third place in India's export earnings in this year. In percentage terms, readymade garments maintained an almost constant share all through the period since 1991. They contributed 12.3% of export earnings in 1991-92 and 12.5% of export earnings in 2000-01. In 2003-04, their share fell to 9.8% and in 2005-06 to 8.3%.
4. Mineral Fuel and Lubricants There has been an improvement in the export of mineral fuels and lubricants both in terms of value and in terms of percentage. In percentage terms, its share has increased from less than 2.9% in 1990-91 to 11.5% in 2005-06. Some other facts regarding structural change in India's export since 1991 are as follows :There are indication that during 1990s, some of Indian exports have moved upwards in value addition chain whereby instead of exporting raw materials, the country has switched over to export of processed goods. There were significant compositional shift within the major manufactured product groups such as engineering. goods, chemicals and allied products, etc.
B. Composition of India's Imports In 1947-48 the main items of India's imports were machineries, oil, grains, cotton, cutlery, hardware implements, chemicals, etc. They constituted 70% of India's imports. After that due to the emphasis on industrialisation during the second 5-Year plan necessitated the imports of capital goods. Now imports of India's are broadly classified into following four categories.
Table below shows composition of India's import from 1990-91 to 2005-06.
The composition of India's imports can be summarised as follows :-
1. Petroleum Products
Imports of petroleum oil and lubricants rose significantly from $ 5364 millions in 199192 to $ 43,963 millions i.e. more than eight times. Due to high price of crude oil, the POL imports jumped to $ 15,650 millions in 2000-01. In 1990-91, petroleum products accounted for nearly 25% of total imports of India. In 2005-06, it has further increased to nearly 31% of the total import bill of India.
2. Capital Goods
The imports of capital goods was $ 3,610 millions in 1991-92. In 1995-96 due to sharp rise in non-electrical machinery imports, the imports of capital goods jumped upto $ 8,458 millions. However due to slowing domestic demand imports of capital goods fell subsequently. The capital goods and related items were 24.1% of the total imports of India in 1990-91, which has come down slightly in 2005-06 to about 22.3%.
3. Pearls and Precious Stones
To meet the requirements of the gems & jewellery industry pearls and precious stones are imported in large quantities. In 1990-91, the share of pearls and precibus stones was 8.7% which has reduced in percentage terms to 6.4% in 2005-06.
4. Iron and Steel
The imports of iron and steel have declined over the years in percentage terms. In 1990-91, the share of iron and steel imports was 5%, which has come down to 3% in 2005-06. This is because, a good amount of iron ore is now extracted in India which has reduced imports.
5. Fertilizers
Import of fertilizers in 1991-92 stood at $ 954 millions. In 2003-04 expenditure on import of fertilizers was $ 635 millions. The import of fertilizers have declined, which indicates less dependence of India on imported fertilizers. The share in total imports of fertilizers was 4.1% in 1990-91, which came down to 1.5% in 2005-06.
Conclusion on India's Foreign Trade
Composition of India's foreign trade has undergone a positive change. It is a remarkable achievement that India have transformed itself from a predominantly primary goods exporting country into a non-primary goods exporting country. Under import too India's dependence on food grains and capital goods has declined.
What are the major causes for the change in Composition of Exports in India? 1. Decline in Percentage Share of Agricultural Products:
After independence, the percentage share of agricultural products in total exports has considerably declined. For instance, in 1970-71, agricultural products contributed 31% in total export earnings which in 2001-02 declined to 14.9%.
2. Decline in the Share of Conventional Items:
Before independence, conventional items comprise of Jute, tea, food grains and minerals contributed more than 41%. But in 2001-02, the share of these items taken together has come down to 16.7%. The main reasons for the decline are an increase in abnormal demand of food grains and raw materials due to an increase in population.
3. Increase in Share of Manufactured Goods:
After independence, the share of manufactured goods in the total export earnings has considerably increased. In the financial year of 1970-71, the share of manufactured goods was 56% which in 2001-02 rose to 81.6%.
4. Increase in the Share of Petroleum Products and Minerals:
The percentage share of export earning in the total earnings is only 0.1 percent while share of minerals has been recorded to be 2.4 respectively in 2001-02. 5. Increase in the Export of Gems and Readymade Garments: Exports of gems and readymade garments had emerged as an important foreign exchange earner in recent years. The exports of gems enjoy the first place as of ready made garments, the second in the total export earnings of the country.
THEORIES OF IT
Introduction
In the 1600 and 1700 centuries, mercantilism stressed that countries should simultaneously encourage exports and discourage imports. Although mercantilism is an old theory it echoes in modern politics and trade policies of many countries. The neoclassical economist Adam Smith, who developed the theory of absolute advantage, was the first to explain why unrestricted free trade is beneficial to a country. Smith argued that 'the invisible hand' of the market mechanism, rather than government policy, should determine what a country imports and what it exports. Two theories have been developed from Adam Smith's absolute advantage theory. The first is the English neoclassical economist David Ricardo's comparative advantage. Two Swedish economists, Eli Hecksher and Bertil Ohlin, develop the second theory. The Heckscher-Ohlin theory is preferred on theoretical grounds, but in real-world international trade pattern it turned out not to be easily transferred, referred to as the Leontief paradox. Another theory trying to explain the failure of the Hecksher-Ohlin theory of international trade was the product life cycle theory developed by Raymond Vernon.
Mercantilism
According to Wild, 2000, the trade theory that states that nations should accumulate financial wealth, usually in the form of gold, by encouraging exports and discouraging imports is called mercantilism. According to this theory other measures of countries' well being, such as living standards or human development, are irrelevant. Mainly Great Britain, France, the Netherlands, Portugal and Spain used mercantilism during the 1500s to the late 1700s. Mercantilistic countries practised the so-called zero-sum game, which meant that world wealth was limited and that countries only could increase their share at expense of their
neighbours. The economic development was prevented when the mercantilistic countries paid the colonies little for export and charged them high price for import. The main problem with mercantilism is that all countries engaged in export but was restricted from import, another prevention from development of international trade.
Absolute Advantage
The Scottish economist Adam Smith developed the trade theory of absolute advantage in 1776. A country that has an absolute advantage produces greater output of a good or service than other countries using the same amount of resources. Smith stated that tariffs and quotas should not restrict international trade; it should be allowed to flow according to market forces. Contrary to mercantilism Smith argued that a country should concentrate on production of goods in which it holds an absolute advantage. No country would then need to produce all the goods it consumed. The theory of absolute advantage destroys the mercantilistic idea that international trade is a zero-sum game. According to the absolute advantage theory, international trade is a positive-sum game, because there are gains for both countries to an exchange. Unlike mercantilism this theory measures the nation's wealth by the living standards of its people and not by gold and silver. There is a potential problem with absolute advantage. If there is one country that does not have an absolute advantage in the production of any product, will there still be benefit to trade, and will trade even occur? The answer may be found in the extension of absolute advantage, the theory of comparative advantage.
Comparative Advantage
The most basic concept in the whole of international trade theory is the principle of comparative advantage, first introduced by David Ricardo in 1817. It remains a major influence on much international trade policy and is therefore important in understanding the modern global economy. The principle of comparative advantage states that a country should specialise in producing and exporting those products in which is has a comparative, or relative cost, advantage compared with other countries and should import those goods in which it has a comparative disadvantage. Out of such specialisation, it is argued, will accrue greater benefit for all. In this theory there are several assumptions that limit the real-world application. The assumption that countries are driven only by the maximisation of production and consumption, and not by issues out of concern for workers or consumers is a mistake.
Heckscher-Ohlin Theory
In the early 1900s an international trade theory called factor proportions theory emerged by two Swedish economists, Eli Heckscher and Bertil Ohlin. This theory is also called the Heckscher-Ohlin theory. The Heckscher-Ohlin theory stresses that countries should produce and export goods that require resources (factors) that are abundant and import goods that require resources in short supply. This theory differs from the theories of comparative advantage and absolute advantage since these theory focuses on the productivity of the production process for a particular good. On the contrary, the Heckscher-Ohlin theory states that a country should specialise production and export using the factors that are most abundant, and thus the cheapest. Not produce, as earlier theories stated, the goods it produces most efficiently. The Heckscher-Ohlin theory is preferred to the Ricardo theory by many economists, because it makes fewer simplifying assumptions. In 1953, Wassily Leontief published a study, where he tested the validity of the Heckscher-Ohlin theory. The study showed that the U.S was more abundant in capital compared to other countries, therefore the U.S would export capital- intensive goods and import labour-intensive goods. Leontief found out that the U.S's export was less capital intensive than import.
Product Life Cycle Theory
Raymond Vernon developed the international product life cycle theory in the 1960s. The international product life cycle theory stresses that a company will begin to export its product and later take on foreign direct investment as the product moves through its life cycle. Eventually a country's export becomes its import. Although the model is developed around the U.S, it can be generalised and applied to any of the developed and innovative markets of the world. The product life cycle theory was developed during the 1960s and focused on the U.S since most innovations came from that market. This was an applicable theory at that time since the U.S dominated the world trade. Today, the U.S is no longer the only innovator of products in the world. Today companies design new products and modify them much quicker than before. Companies are forced to introduce the products in many different markets at the same time to gain cost benefits before its sales declines. The theory does not explain trade patterns of today.
Summary
Mercantilism proposed that a country should try to export more than it imports, in order to receive gold. The main criticism of mercantilism is that countries are restricted from import, a prevention of international trade. Adam Smith developed the theory of absolute advantage that stressed that a country should produce goods or services if it uses a lesser amount of resources than other countries. David Ricardo stated in his theory of comparative advantage that a country should specialise in producing and exporting products in which it has a comparative advantage and it should import goods in which it has a comparative disadvantage. Hecksher-Ohlin's theory of factor endowments stressed that a country should produce and export goods that require resources (factors) that are abundant in the home country. Leontief tested the Hecksher-Ohlin theory in the U.S. and found that it was not applicable in the U.S. Raymond Vernon's product life cycle theory stresses that a company will begin to export its product and later take on foreign direct investment as the product moves through its life cycle. Eventually a country's export becomes its import.
OBJECTIVES OF THE STUDY OF INTERNATIONAL TRADE ITS DIRECTION AND COMPOSITION
? To find out the direction and composition of Indian Export and Import. ? To find out the list of countries India Trades with. ? To collect the data of Import and Export values of India.
REVIEW OF LITERATURE
Mukherji Indra Nath (2011)In this paper he makes an attempt to explain the trend in bilateral trade between the two countries. He points out that barring setbacks in certain years, the bilateral trade between the two countries has been growing steadily. He notes that even though Nepal has been able to diversify its trade with India, its trade deficit with India has been increasing sharply, and its export earnings are barely sufficient to meet the cost of imports of petroleum products from India.This paper identifies products with high trade potential of both the countries so that these could be targeted in trade facilitation measures or when mutual recognition of each country’s certification is accepted by the other. Realizing the close linkage between trade and investment, this paper examines the volume and status of Indian foreign direct investments in Nepal. An exercise in intra-industry trade between the two countries gives direction for sectors/industries in which Indian investment could flow. This paper published by Mr.Mukherji expresses concern about the labour situation in Nepal and the lack of arbitration tribunals in case of dispute. Quite a number of Indian industries have been shut down and those in the pipeline could also be adversely affected. In this context the need for long-pending Bilateral Investment Treaty (BIT) has been emphasized.
Chaney Thomas (2011): Under this research paper Mr.Thomas determines the gravity equation in international trade is one of the most robust empirical ?nding in economics: bilateral trade between two countries is proportional to their respective sizes, measured by their GDP, and inversely proportional to the geographic distance between them.While the
role of economic size is well understood, the role played by distance remains a mystery. In this paper, He propose the ?rst explanation for the gravity equation in international trade. This explanation is based on the emergence of a stable international network of importers and exporters. Firms can only export into markets in which they have a contact. They acquire contacts by gradually meeting the contacts of their contacts.He show that if, as observed empirically, (i) (ii) the distribution of the number of foreign countries accessed by exporters is fattailed there is a large turnover in exports, with ?rms often going in and out of individual foreign markets, and (iii) geographic distance hinders the initial acquisition of contactsin an arbitrary way, then trade is proportional to country size, and inversely proportional todistance. Data on ?rm level, sectoral, and aggregate trade support further predictions of the model.
Ma Jing, Lu Yuduo (2011):In this paper his main purpose is to , firstly explain the reason of international trade according to recent theories; secondly, collect several sorts of opinions about free trade and protectionism referring to relevant literatures; thirdly describe export barriers in different aspects, such as natural barriers and artificial barriers; lastly from trade regulation perspective introduce WTO as a tool of promoting international trade.
Sen Sunanda (2010): In this research paper she provides a survey of the literature on trade theory, from the classical example of comparative advantage to the New Trade theories currently used by many advanced countries to direct industrial policy and trade. An account is provided of the neo-classical brand of reciprocal demand and resource endowment theories, along with their usual empirical verifications and logical critiques. A useful supplement is provided in terms of Staffan Linder’s theory of “overlapping demand,” which provides an explanation of trade structure in terms of aggregate demand. Attention is drawn to new developments in trade theory, with strategic trade providing inputs to industrial policy. Issues relating to trade, growth, and development are dealt with separately, supplemented by an account of the neo-Marxist versions of trade and underdevelopment.
Pooja Sharma (2010): This paper looks at international trade governance, which is taken to consist of the set of institutions and organisational structures that determine the formulation and enforcement of rules and the associated negotiations over policies. We first distinguish two forms of trade governance: regional arrangements and a global system of trade governance. The paper then proposes a framework for understanding the coexistence of these alternative forms of trade governance based on their major economic governance characteristics. We assess the nature of the two trade governance modes and compare and contrast them along their main institutional characteristics. The global mode may be characterised as largely rule-based in contrast to the regional mode, which is relationship-based with flexibility in incorporation of rules. We argue that countries may simultaneously engage in different modes of trade liberalisation due both to their trade and income, as well as, governance implications, including the interplay between alternative modes of governance.
Holger Breinlich,Chiara Criscuolo(2010): They provide a novel set of stylized facts on Örms engaging in international trade in services, using unique data on Örm-level exports and imports from the worldís second largest services exporter, the United Kingdom (UK). They show that only a fraction of UK Örms engage in international trade in services, that trade participation varies widely across industries and that services traders are different from non-traders in terms of size, productivity and other Örm characteristics. They also provide detailed evidence on the trading patterns of services exporters and importers, such as the number of markets served, the value of exports and imports per market and the share of individual markets in overall sales. They interpret these facts in the light of existing theories of international trade in services and goods. Our results demonstrate that Örm-level heterogeneity is a key feature of services trade. Also, they many similarities between services and goods trade at the Örm level and conclude that existing heterogeneous Örm models for goods trade will be a good starting point for explaining trade in services as well.
Chen Huan (2009): Under this research paper he determines the relationship between foreign trade and economic growth. On this issue, he at home and abroad used the relative data of china and got different conclusions by different methods. At first, this thesis reviews
the theories of the relationship between foreign trade and economic growth, and then sum up the main arguments of modern empirical economics. Finally, He makes a brief comment and put forward some questions that should be explored in depth in this area. He provides a broader and more comprehensive perspective to the later researchers.
P.Swan G.M(2009): In this paper Mr.Swan reviews the body of empirical work that has investigated the specific question: How international standards impact on international trade? Do they help or hinder trade? The work reviewed ranges from econometric studies using a variety of measures of standards derived from e.g. the Perinorm database, diffusion of ISO9000, regional agreements, mutual recognition agreements and harmonisation, to surveys of exporting firms. A mapping of the findings from econometric models shows that there is often, but not always, a positive relationship between international standards and exports or imports, which is in line with the widely held view that international standards are supportive of trade. For national (i.e. country-specific) standards studies find positive as well as negative effects on trade and thus provide only qualified support for the commonly held view that national standards create barriers to trade. Overall, this literature reviewed does not provide a single answer to the question of trade effects, and the explanation for this appears to have to do with how the multiple economic effects of standards interact. This paper summarises some of the existing empirical evidence for some of these effects, which include network externalities, variety, knowledge, quality and trust, and which merit further research in order to understand when standards help trade, and when not.
Sova Ana Maria ,Sova Robert,Rault Christopher(2008): This article deals with econometric developments for the estimation of gravity model, which allow to get convergent parameter estimates even when a correlation exists between the explanatory variables and the specific unobservable characteristics of each individual. They implement panel data econometric techniques to characterize bilateral trade flows between heterogeneous
economies. Their econometric results based on a sample of 4 Central and Eastern European countries (CEEC-4) and 19 OECD countries over a 18-year period highlight the importance by taking into account the unobservable heterogeneity to obtain a robust empirical specification and unbiased coefficients.
Thoenig Mathias,Mayer Thierry,Martin Philippe (2007): This paper analyzes empirically the relationship between civil wars and international trade. They ?rst show that trade destruction due to civil wars is very large and persistent and increases with the severity of the con?ict . Then they identify two e?ects that trade can have on the risk of civil con?icts:it may act as a deterrent if trade gains are put at risk during civil wars butit may also act as an insurance if international trade provides a substituteto internal trade during civil wars. They ?nd support for the presence ofthese two mechanisms and conclude that trade openness may deter the most severe civil wars (those that destroy the largest amount of trade) but may increase the risk of lower scale con?icts.
CHAND RAMESH (2006): Under this research paper he concentrates more on Agriculture. Agriculture contributes substantially to output and employment in South Asian countries. Therefore, any change, like trade liberalization, those impacts on the agriculture sector has widespread ramifications in terms of employment, nutrition, livelihood and food security. Implementation of various provisions of the WTO Agreement on Agriculture causes serious concern with regard to the performance of the agriculture sector and food security, and these countries have become quite sensitive to consequences of future WTO agreements. The cautious approach towards the WTO is mainly caused by the increased dependence on food imports and deterioration in self-reliance in agriculture in the post-WTO period because of a much higher growth in food import as compared to exports. Decline in international prices and trade distortions are the underlying causes for an adverse impact on agriculture during the post-WTO period. South Asian countries should address these two issues in future negotiations PONCET Sandra(2002): In this paper, they rely on a new set of provincial trade flow to analyze and compare the magnitudeand evolution of Chinese provinces’ engagement in domestic and international trade by computingall-inclusive indicators of trade barriers. They find that Chinese provinces’ greater involvement ininternational trade went hand in hand with a decrease in domestic trade flow intensity between 1987and 1997. Even if Chinese provinces still rely more on goods from the rest of China than oninternational imports, provincial borders matter more and more inside the country in the sense that they imply greater discontinuities in the Chinese domestic market.
Strutt Anna, Poot Jacques, Dubbeldam Jason: Under this research paper they examines the international and New Zealand literatures on the two-way interaction between international migration and agreements designed to enhance cross-border trade or investment. Benefits and costs of migration, to the extent that these may feature in trade and migration negotiations, are discussed. While trade and migration can be substitutes in some contexts, they will be complements in other contexts. Liberalisation of services and the movement of people are likely to offer much more significant gains than liberalisation of remaining barriers to goods trade. Significant scope for liberalisation under GATS mode 4 (the movement of natural persons) may remain. However, temporary migration is already promoted on a unilateral and bilateral basis within immigration policy frameworks that may provide greater flexibility than GATS mode 4. With respect to both trade and migration, the more diverse the exchanging countries are, the greater the economic benefits tend to be. However, greater diversity may also imply greater social costs. This paradox of diversity needs to be addressed through appropriate social policies accompanying enhanced temporary and permanent migration.
Cox Larry W :This paper reviews 51 international entrepreneurship articles gleaned from the ABI /Inform database of business citations. It divides the articles into four categories: (a) individual entrepreneurs and their traits, (b) entrepreneurial processes, (c) environmental factors, and (d)small and entrepreneurial ventures. They suggests that there is much room for further research,particularly in cross-national comparisons of individual entrepreneurs, and entrepreneurialprocesses.
Guillaume Daudin, Jean-Luc Gaffard and Francesco Saraceno : This paper presents a critical survey of the literature on trade openness. In the first part they start by analyzing distributive domestic issues that arise following changing trade patterns. They identify the sources of the problems, and assess the technical and political feasibility of measures aimed at solving them. Then they examine the distribution of trade gains among countries. They highlight situations in which asymmetric productivity gains may lead to conflicts between
countries despite an increase in global welfare. The second part shifts the focus on dynamic consequences of trade. They begin by the theoretical arguments on the link between trade openness and growth. Then they explore the tentative empirical arguments. Finally, they highlight the importance of transition processes that affects economies experiencing changes in international trade patterns. The paper concludes with a discussion of appropriate policy measures.
RESEARCH METHODOLOGY
? Research Methodology:To carry out the study the following research methodology has been adopted? Data collection:The study is based on Secondary data only. Books: Mishra & Puri (from pg no.553-563) only introduction part. Internet: -Websites: ? ? ? ? ? http://en.wikipedia.org/wiki/International_trade httpcommerce.nic.intradestatsIndiastrade_press.pdf httpwww.unescap.orgtidartnetmtgtdgc_iift.pdf http://www.fao.org/DOCREP/004/Y1669E/y1669e02.htm#TopOfPage http://www.indiainfoline.com/Markets/News/Indias-Foreign-TradeFebruary-2012/5388939941 ? http://www.cybex.in/Exim-News/India-S-Foreign-Trade-February3344.aspx ? http://commerce.nic.in/ann/RFD_2011_12.pdf ? Sampling: Convienient Sampling is used. ? Sample Design: Descriptive Design. ? Data Processing and Data Analysis: Tables,Bar Charts and percentages.
DATA ANALYSIS
Foreign Trade statics 2003-04 onwards yearly
YEAR 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
2009-10
2010-11
EXPORT 63843 83536 103091 126361 162904 185295 178751 240677
IMPORT 78149 111517 149166 185149 251439 303696 288373 345905
TRADE BALANCE -14307 -27981 -46075 -59388 -88535 -118401 -109621 -105229
400,000 300,000 200,000 100,000 0 -100,000 -200,000
export Import Trade balance
Fig.no.1
INTERPRETATION: ? In year 2003-04,Export rate of India is 63,843$ and Import rate is 78,149$. ? After 3 year in year 2006-07,the Export rate is increased by 1,26,361$ and Import rate is increased by 1,85,149$. ? In year 2010-11,the Export rate is increased by 2,40,677$ and Import rate is increased by 3,45,9054. Import of India is higher than Export of India as shown in the graph that is why the Trade balance is in negative(-) form. Foreign Trade 2007-08 onwards Monthly 2010-11
Month April May June July August September October November December January February March Export 17742 16531 19948 16142 16854 18204 17930 21489 22500 20605 23597 29135 Import 28770 26550 25883 26681 27044 29512 32462 28842 25130 28587 31701 34743 Trade balance -11028 -10019 -5935 -10539 -10190 -11308 -14532 -7353 -2630 -7982 -8104 -5608
40000 30000 20000 Export 2010-11 10000 0 -10000 -20000 Import 2010-11 Balance 2010-11
Fig.no.2 INTERPRETATION: ? From April 2010-March 2011,the Export rate is fluctuating at a increasing rate from 17,742$ to 29,135$ and Import rate is also fluctuating at a increasing rate from 28,770$ to 34,743$. Import of India is higher than Export of India as shown in the graph that is why the Trade balance is in negative(-) form
FINDINGS
? Import is higher than export in all Trades, and this is the main reason of the negativity of the Trade Balances
Composition of India’s Import & Export ? Petroleum commodities are the most imported items in India i;e.,30.9% in the year 2010-11. ? Manufactured goods covers the highest % of the India’s exported items i;e.,72% in the year 2010-11.
Direction of India’s Import & Export ? 32.73% of india’s import in 2010-11 had been imported by OECD’S. ? 44.3% of India’s export in 2010-11 had been exported to OECD’S
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