Question

1. What was the main channel connecting countries in the past? How is it different
now?
2. Distinguish between foreign trade and foreign investment
3. In recent years China has been importing steel from India. Explain how the import
of steel by China will affect.
(a) steel companies in China.
(b) steel companies in India.
(c) industries buying steel for production of other industrial goods in China.
4. How will the import of steel from India into the Chinese markets lead to integration
of markets for steel in the two countries? Explain.​

Answer 1

1. Trade was the main channel connecting the countries in the past. Silk route connected different countries of the world; as a result extensive trade took place through this route. Now besides trade, capital, technology, people and services are taking place all over the world.
2. Foreign trade implies the trade of goods, services and capital between two countries of the world. Foreign investment refers to an investment made in a company from a source outside the country. Integration of markets of different countries. Additional investment in the form of capital, technology and other resources.

4) a)Due to imports from India, choice in the Chinese market will increase. (b) Producers of steel in both countries will compete with each other to get increased market share. (c) Prices of similar varieties of steel in the Indian and Chinese markets will fluctuate and tend to become equal after some time.