INTRODUCTION “Trade “Trade is not an end in itself, but a means to economic growth and national development The primar! purpose is not the mere earning of foreign e"change but the stimulation of greater economic activit!# The econom! of ancient India had a strong cross border trade and commerce relation relation with China and the! mainl! traded food grains, spices, cottons, gold, silver, and metals $urther, a more organi%ed form of trans&world trade has been in force from the mid of '(
th
centur! and it started as a means to e"plore new business business destination
and opportunities The ')
th
centur! mar*s the merging of the modernit! with globali%ation
and it also mar*s the foundation for the creation of international trade law The modern da! Indian econom! +'--. had ta*en cue from the histor! of globali%ation and structured its foreign trade polic! accordingl! The liberali%ed economic polic! adapted and implemented b! the /overnment of India, finds its root bac* to the rich histor! of globali%ation Now /lobali%ation is accepted as the New 0antra for economic success of economies over the world where India and China have proved this to some e"tent
123T I4 $OR5I/N TR3D5 The e"change of goods and services between the domestic sector of a given nation and its foreign sector +that is, other nations of the world. 3lso termed international trade when viewed from the perspective of the global econom!, econom!, this e"change of production is comparable to an! e"change, e"cept that bu!ers and sellers are from different countries 6e! insight from the stud! of foreign trade includes the law of comparative advantage and trade protection policies $oreign trade arises when an econom! e"changes e"changes of goods and services with its foreign sector sector This includes goods and services produced in the domestic econom! of a nation and purchased b! the foreign sector, what is termed e"ports, e"ports, and goods and services produced in
the foreign sector and purchased b! the domestic econom!, what is termed imports $oreign trade is also termed international trade The distinction between the two terms is based on perspective International trade is viewed from the perspective of the global econom!, in which each of the nations of the world are pla!ers in the e"change game $oreign trade is viewed from the perspective of the domestic sector of a given econom! This This foreign trade perspective ta*es a decidedl! domestic, geocentric view, that is, 7us7 +the domestic sector. versus 7them7 +the foreign sector. The flow of trade between a given nation and its foreign sector is captured captured b! net e"ports e"ports Net e"ports are the difference between e"ports +goods and services produced b! the domestic econom! and purchased b! the foreign sector. and imports +goods and services produced b! the foreign sector and purchased b! the domestic econom!. In addition to highlighting highlighting the law of comparative advantage, viewing international trade from a domestic8foreign perspective enables enables a better understanding understanding of the wh! and how of foreign trade policies designed to promote e"ports and8or restrict imports, and thus increase net e"ports The *e! foreign trade policies are tariffs, import 9uotas, and e"port subsidies
1hat is 5conomic Development: 5conomic development means different different things to different people people On a broad scale, an!thing a communit! does to foster and create a health! econom! can fall under the auspice of economic development Toda!;s economic development professionals are tr!ing harder than ever to define their field in terms that are more concrete and salient to polic!ma*ers, the public, and other professionals There are probabl! as man! definitions for economic development as there are people who practice it
$rom a public perspective, local economic development involves the allocation of limited resources & land, labor, capitol and entrepreneurship in a wa! that has a positive effect on the level of business activit!, emplo!ment, emplo!ment, income distribution patterns, and fiscal solvenc!
It is a process of deliberate intervention in the normal economic growth b! ma*ing it easier or more attractive Toda!, communities in California are giving attention to what the! can do to promote fiscal stabilit! and greater economic development development
5conomic development is a concerted effort on the part of the responsible responsible governing bod! in a cit! or count! to influence the direction of private sector investment toward opportunities that can lead to sustained economic growth 4ustained economic growth can provide sufficient incomes for the local labor force, profitable business opportunities for emplo!ers and ta" revenues for maintaining an infrastructure to support this continued growth There is no alternative to private sector investment as the engine for economic growth, but there are man! initiatives that !ou can support to encourage investments where the communit! feels the! are needed the most
It is important to *now that economic development is not communit! development Communit! development is a process for ma*ing a communit! a better place to live and wor* 5conomic development is purel! and simpl! the creation of w ealth in which communit! benefits are created There are onl! three approaches used to enhance local economic development The! are>
Role of foreign trade in economic development of countries Introduction of foreign trade: There is no country in the world today which produces all the commodities it needs. Every country, therefore, tries to produce those commodities in which it has comparative advantage. It exchanges part of those commodities with the commo commodit ditie ies s produc produced ed by other other countr countrie ies s relat relative ively ly more more effic efficien iently tly.. The relative difference in factor endowments, technology, tastes etc, among the nations of the world have greatly widened the basis of international trade. Role of foreign trade in economic development development The role of foreign trade can be judged by the following faces: •
Foreign trade and economic development. Foreign trade plays very important role in the economic development of any country. a!istan also exports a lot of agricultural product to other countries and imports the capital goods from other countries. Therefore, it is not wrong to say that economic development of a country depends of foreign trade.
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Foreign exchange earning Foreign trade provides foreign exchange which can be used to remove the poverty and other productive purposes.
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Market expansion The demand factor plays very important role in increasing the production of any any co coun untr try y. The The fore foreig ign n trad trade e expa expand nds s the the mar! mar!et et and and enco encour urag ages es the the producers. In a!istan home mar!et is very limited due to poverty. "o it is necessary chat we should sell our product in other countries.
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Increase in investment
Foreign trade encourages the investor to increase the investment to produce more goods. "o the rate of investment increases. •
Foreign investment
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#esides the local investment, foreign trade provides incentives for the foreign investors to invest in those countries where there is a shortage of investment. Increase in national income Foreign trade increases the scale of production and national income of the country. To meet the foreign demand we increase the production on large scale so $% also increases.
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Decrease in unemployment &ith the rise in the demand of goods domestic resources are fully utili'ed and it incre crease ses s the the rate of deve devellopm opment in the the co cou untry ntry and and redu reduce ces s the the unemployment in the world.
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Price stability Foreign trade helps to bring stability in price level. (ll those goods which are short and prices are increasing can be imported and those goods which are surplus can be exported. There by stopping fluctuation in prices.
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peciali!ation Ther There e is a diff differ ere ence nce in the the )ual )ualit ity y and and )uan )uanti tity ty of vari variou ous s fact factor ors s of production in different countries. Each country adopts the speciali'ation in the production of those commodities, in which it has comparative advantage. "o all trading countries enjoy profit through international trade.
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Remove monopolies Foreign trade also discourages the monopolies. &here every any monopolist increases the prices, government allows the import of goods to reduce the prices in the country.
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Removal of food shortage India is also facing the food shortage problem. To remove the food shortage India has imported the wheat many times. "o due to foreign trade we are solving this problem for many years.
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"gricultural development (gricultural development is the bac! bone in our economy. Foreign trade has played very important role for the development of our agriculture sector. Every year year we expor exportt rice, rice, cot cotton ton,, fruits fruits and veget vegetabl ables es to ot other her countr countries ies.. The The export of goods ma!es our farmer more prosperous. It inspires the spirit of development in them.
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Import of consumer goods India and a!istan imports the various consumer goods from other countries, whic which h are are no nott prod produc uced ed insi inside de the the co coun untr try y. Today day the the shor shorta tage ge of any any commodity can be removed through international trade.
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#o improve $uality of local products Foreign trade helps to improve )uality of local products and extends mar!et thr through ugh cha change nges in dem demand and supp supplly as for foreign ign tra trade can cre create competition with the rest of the world.
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%xternal economics External economics can also be achieved through foreign trade. The industries producing foods on large scale in a!istan and India are enjoying the external economics due to international trade.
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&ompetition 'ith foreign producers &e can compete with the foreign producers in foreign trade so it improves the )uality and reduces the cost of production. It is also an advantage of foreign trade.
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(seful for the 'orld peace Today all the countries are tied in trade relations with each other. "o foreign trade also contribute to peace and prosperity in the world.
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Import of capital goods and technology The inflow of capital goods and technology in the less developed countries has increased the rate of economic development, and this is due to foreign trade.
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Import substitution These countries not only produce import substitute, but also reduce deficit in balance of payment of their countries.
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)etter understanding Foreign trade provides an opportunity to the people of different countries to meet, discuss, and exchange views and ideas related to their social, economic and political problems.
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Dissemination of kno'ledge Foreign trade is also responsible for dissemination of !nowledge and learning from developed countries to under developed countries.
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Interdependence
Foreign trade is responsible for creating economic depending and establishing economic interest in the economy of the countries having trade relations. •
Factors productivity Through foreign trade the productivity of labour and capital and organi'ation increases. *emand ma!e them mobile on national as well as international level which helps underdeveloped countries to develop and maintain a high level of growth of developed countries.
/=O<3=I?3TION /=O<3=I?3TION 3ND C23==5N/54 O$ TR3D5 IN INDI3 The rise in the international trade is essential for the growth of globali%ation International International trade and its impact on economic growth cruciall! depend on globali%ation The restrictions restrictions to international trade would limit the nations to the services and goods produced within its territories, and the! would lose out on the valuable revenue from the global trade India must evolve an appropriate framewor* to wrest ma"imum benefits out of international trade and investment This framewor* should include +a. ma*ing e"plicit the list of demands that India would li*e to ma*e on the multilateral trade s!stem, and +b. steps that India should ta*e to reali%e the full potential from globali%ation 1ithout 1ithout being e"haustive, the demands of the developing countries on the multilateral trading s!stem should include +'. establishing s!mmetr! as between the movement of capital and natural persons, +@. delin*ing environmental environmental standards and labor related considerations from trade negotiations, +A. %ero tariffs in industriali%ed countries on labor intensive e"ports of developing countries, +(. ade9uate protection to genetic or biological material and traditional *nowledge of developing countries, +B. prohibition of unilateral trade action and e"tra territorial application of national laws and regulations, and +. effective restraint on industriali%ed countries countries in initiating anti&dumping and countervailing action against e"ports from developing countries The purpose of the new trading s!stem must be to ensure “free and fair# trade among countries The emphasis so far has been on “free# rather than “fair# trade trade It is in this conte"t that the rich industriall! advanced countries have an obligation 1hile re9uiring re9uiring developing countries to dismantle barriers and oin the main stream of international trade, the! have
been raising significant tariff and non&tariff barriers on trade from developing countries 3lthough average tariffs in the United 4tates, Canada, 5uropean Union and Eapan F the so called Guad countries F range from onl! (AH in Eapan to )AH in Canada, their tariff and trade barriers remain much higher on man! products e"ported b! developing countries In fact, these trade barriers impose a serious burden on the developing countries It is important that if the rich countries want a trading s!stem that is trul! fair, the! should come forward to reduce the trade barriers and subsidies that prevent the products products of developing countries from reaching their mar*ets Otherwise the pleas of these countries for a competitive s!stem will sound hollow If development is accepted as the maor obective of trade as the Doha declaration proclaimed, proclaimed, it should be possible to wor* out a trading arrangement that is beneficial to all countries There have been protracted negotiations at 1TO in reforming the trade s!stem 3dmittedl!, the the tariff and non&tariff barriers are coming down The second set of measures that should form part of the action plan must relate to strengthening strengthening Indias position in international trade India has much strength, which several developing countries lac* In that sense, India is different and is in a stronger position to gain from international trade and investment 2aving a greater freedom of movement of s*illed manpower, India India should attempt to ta*e all efforts to ensure that it continues to remain a frontline countr! in the area of s*illed manpower India can attract greater foreign investment, if it can accelerate our growth with stabilit! It must ma*e good use of the e"tended time given to developing countries to dismantle trade barriers The world cannot marginali%e India
CONC=U4ION India being an open econom! not onl! its e"ports are raising but imports has also risen reflecting reflecting her potentials to emerge e merge as a super s uper power power 5ven a limited attempt of globali%ation has benefited Indian econom! in the best possible wa! India should overcome the constraints of trade such as electricit! shortages and inade9uate transportation infrastructure infrastructure and utili%e trade as an effective engine for accelerating the pace of inclusive development in the countr! To become a maor pla!er in world trade it has to reduce import restrictions which are re9uired re9uired to stimulate our econom! It is necessar! to mention that International trade alone cannot bring about economic growth and prosperit! in an! countr! 3part from fle"ible trade policies there are also other factors li*e favorable macroeconomic scenario and political stabilit! that need to be there to complement the gains from trade India can achieve a BH share of world trade in both goods and services b! the !ear @-@- which is a fourfold increase in our percentage share in the ne"t '' !ears provided the polic! measures and economic infrastructure infrastructure are accommodative enough to cope with the changes in social and financial scenario that result from it If so, India of @-@B is sure to occup! a ver! different place, and a much more dominant force in the world econom!, than was the case twent! five !ears ago or at the beginning of the new millennium
MInternational Eournal of 3dvanced Research in 0anagement and 4ocial 4ciences I44N> @@L)&@A ( Deluca, Dallas +'(., 7Trade 7Trade Related Investment 0easures> U4 5fforts to 4hape a Jro&
Jublications, New Delhi 4inha, Eai < J +@--A. 7Chapter ', Industrial /rowth and $oreign Capital, The 5arl! Kears7, L 4tiglit%, Eoseph 5 +@--@., /lobalisation and its Discontents, D iscontents, 3lien 3lien =ane The Jenguin Jress, =ondon ) The Unfolding 0ar*et, 0ultinationals in India> 0anaging the I nterface of Culture
