Explain the three types of movements or flows within international economic exchange. Find one example of each type of flow which involved India and Indians, and write a short account of it.
Answers
The three types of movements or flows within the international economic exchange are:
(i) Flow of trade (trade in goods such as cloth or wheat): India was involved in trade relations since ancient times. It exported textiles and spices in return for gold and silver from Europe.
(ii) Flow of labour (the migration of people to new areas in search of work): In the nineteenth century, thousands of Indian labourers went to work on plantations, in mines, and in road and railway construction projects around the world. Indentured labourers were hired under contacts which promised their return to India after working for five years in the plantation. The living conditions were harsh and the labourers had very few legal rights.
(iii) Flow of capital (short-term and long-term loan to and from other nations): To finance the World War, Britain took high loans from the USA. Since India was under British rule, the impact of these loan debts was felt in India too. The British government increased taxes, interest rates, and lowered the prices of products it bought from the colony. This affected the Indian economy very strongly.
- The flow of trade: The flow of trade refers largely to trade in goods. For example, wheat travelled from Russia, America and Australia to Britain.
- The flow of labour: This includes the migration of people in search of employment. For example, more than 50 million people migrated from Europe to America and Australia In search of jobs.
- The movement of capital: This covers the movement of capital for short-term or long-term investments over long distances. For example, capital flowed from financial centers such as London to other parts of the world.