vi. elaborate the indias foreign trade and balance of payment.
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8 Unit-2
8.7 LESSON 1 UNIT III FOREIGN TRADE& BALANCE OF PAYMENT POSITION OF INDIA
LESSON 1 UNIT III
FOREIGN TRADE& BALANCE OF PAYMENT POSITION OF INDIA
- Dr. Anupama Rajput
Studying this chapter should enable you to understand:
Role of foreign trade in the economic development of a country
Trends in India's foreign trade
Definition of Balance of Payments (BOP)
Components of BOP
Developments in India’s BOP since 1950-51
Foreign Trade: Role and Significance
Foreign trade refers to the exchange of goods and services between two or more countries. Foreign trade is an indispensable means for sustaining the economic growth and development of a nation. A country cannot be completely self sufficient, and trade between countries is therefore essential to ensure supply of a country’s needs. Moreover, it enables the people to enjoy those goods and services which the nation cannot produce themselves or which can be produced at a relatively high cost. In other words due to the diversities amongst the countries in terms of availability of labor, capital, technology and entrepreneurial skills a country cannot have the potential to produce all the commodities. Each one of them specializes in the production of only such commodities, which can be produced at comparatively lower cost than the others. Such products are exported to others and in return imports of products are made where there exists comparative cost disadvantage in the domestic production. This is referred to as the theory of comparative advantage. The theory argued that free trade will benefit all due to comparative advantage.