Question

Trade Use economic concepts that you acquired in this class to answer the following question. You must also supplement your text with researched information that will support your arguments: Describe the positive or negative impact(s) of international trade or of globalization on a developing country or region of your choice. You should include all of the following in your text, but can choose to incorporate more information so as to provide a more complete response:

o Briefly describe the country or region of your choice by focusing on that country’s trade patterns with one or many of its important trade partner(s). You must use statistical data in part to address this point.

o Incorporate at least one economic theory learned in class and explain it in the context of trade in developing countries.

o Describe the positive or negative impact(s) that international trading or that globalization has had for that country or for that region. Discussion Forum Instructions General Instructions:

o You must incorporate in your paper economic theories learned in class and apply them to your analysis.

o You must state your interpretation of the information that you provided and then justify your interpretation using several arguments that you will need to explain.

o You should take a balanced position. Special Instructions: o Your response to the discussion forum prompt must be of at least 450 words. write on Microsoft word

Answer 1

The international economic relations between two countries depend on a number of factors like import and export relations, investment between two countries and etc. Trade is an important factor in this context. Normally there are two types of trades - bilateral trade and multilateral trade. In the recent times, foreign direct investment relations between two countries have assumed increased importance as well.

In the modern day economic scenario globalization has played an important role in determining the international economic relationship between two or more countries. Prior to this phenomenon there were several countries that had erected trade barriers in the form of protective foreign trade barriers and tax policies that were not exactly in favor of attracting foreign direct investment from other countries.

In the era of globalization there have been major changes in the economic relationships between the various countries of the world. The World Trade Organization (WTO) has worked in conjunction with the governments of several countries to lift trade barriers and bring about a better economic environment and make good international trade relations among them. This has led to the creation of several free trade zones all around the world. As a result of the creation of the free trade zones it has been possible to promote free trade on a global basis.

The importance of good international economic relations may be understood by taking a look at India and China. Apart from being in good terms with other countries these two nations also have cordial economic relationships and they have shared an almost symbiotic relationship from an economic point of view as well. They have continued to make economic progress by helping each other out and have set the trend as far as international economic relations are concerned.
The implementation of the various reform measures has given immense opportunities to the countries of the world to have part in. The international economic relation department is simply a country's participation in the field of international trade and investment with other countries of the world.

India's International Economic Relations

India has important and strong economic relations with many countries in the world. Traditionally India has maintained trade relations with various countries. After the economic reforms of the early nineties, the Indian economy was opened up to further bilateral trade relations with various countries and to Foreign Direct Investment (FDI). Import restrictions on many items were lifted which led to expansion of India's economic relations with other nations.

      India’s Import and Export Statistics

A publication on India's trade and investment by Exim bank highlights the trend in exports moving towards southern countries, particularly in the Asia and Africa regions. Asia is a key destination of India's exports - in 2001-02 Asia's share stood at 40.2% but in 2011-12 it grew to 51.6%. Europe, however has seen a decline in its share, down to 19% in 2011-12 from 24.8% in 2001-02.

India's key exports in 2012 were petroleum products which generated $56bn, followed by gems and jewelry with $47bn. Pharma products, transport equipment, machinery and readymade garments are also big exports for India.

The 2012 data shows that the United Arab Emirates (UAE) was India's biggest export market, closely followed by the USA. The latest data available from the Indian Government's Ministry of Commerce and Industry covering April-September 2012, shows the US to have slightly overtaken the UAE. Explore the graphic above to see India's imports and exports by value and year. The UK is the eighth biggest export market for India and held 2.9% of the market share in April-September 2012.

Crude petroleum is India's biggest import with $155bn spent on it in 2012. Imports of gold and silver amounted to $62bn and electronic goods and pearls and precious stones are also top import items for the country.

India's top import source is China followed by the UAE, Switzerland and Saudi Arabia. The UK came in at 21st place in 2011-12 with India importing a total of $7.7bn. In the six months recorded so far for 2012-13, the UK has dropped a place and has a 1.4% share of the India's import sources.

The table below shows India's imports and exports by country including the share. The downloadable spreadsheet also has data on the top import and export products for the country.

POSITIVE EFFECTS

Some economists have a positive outlook regarding the net effects of globalization on economic growth. These effects have been analyzed over the years by several studies attempting to measure the impact of globalization on various nations' economies using variables such as trade, capital flows and their openness, GDP per capita, foreign direct investment (FDI) and more. These studies examined the effects of several components of globalization on growth using time series cross sectional data on trade, FDI and portfolio investment. Although they provide an analysis of individual components of globalization on economic growth, some of the results are inconclusive or even contradictory. However, overall, the findings of those studies seem to be supportive of the economists' positive position, instead of the one held by the public and non-economist view.

      Negative Effects

Non-economists and the wide public expect the costs associated with globalization to outweigh the benefits, especially in the short-run. Less wealthy countries from those among the industrialized nations may not have the same highly-accentuated beneficial effect from globalization as more wealthy countries, measured by GDP per capita etc. Although free trade increases opportunities for international trade, it also increases the risk of failure for smaller companies that cannot compete globally. Additionally, free trade may drive up production and labor costs, including higher wages for more skilled workforce, which again can lead to outsourcing of jobs from countries with higher wages. Domestic industries in some countries may be endangered due to comparative or absolute advantage of other countries in specific industries. Another possible danger and harmful effect is the overuse and abuse of natural resources to meet new higher demands in the production of goods.