IB0015- Foreign Trade of India

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ASSIGNMENT

DRIVE	SPRING 2016
PROGRAM	Master of Business Administration- MBA
SEMESTER	4
SUBJECT CODE & NAME	IB0015- Foreign Trade of India
BK ID	B1908
CREDIT & MARKS	4 CREDITS, 60 MARKS

Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

Question. 1. Discuss the Theory of Absolute Advantage and Ricardo’s Theory of Comparative Advantage.

Answer:The theory of comparative advantage is an economic theory about the work gains from trade for individuals, firms, or nations that arise from differences in their factor endowments or technological progress. In an economic model, an agent has a comparative advantage over another in producing a particular good if they can

New theory of international values: Recently, Y. Shiozawa succeeded to construct a theory of international value on the tradition of Ricardo's cost-of-production theory of value. It is based on a wide assumption as follows:

·         Many countries

·          

Question. 2. Discuss in detail Foreign Trade in India since Independence.

Answer:The origin of India’s foreign trade can be traced back to the age of the Indus Valley civilization. But the growth of foreign trade gained momentum during the British rule. During that period, India was a supplier of food stuffs and raw materials to England and an importer of anufactured goods. However, organised attempts to promote foreign trade were made only after Independence, particularly with the onset of economic planning. Indian economic planning completed five decades. During this period, the value, composition, and direction of India’s foreign trade have undergone significant changes.

Question. 3. Explain the Main Features of India’s Foreign Trade Policy.

Answer:Foreign trade plays an important role in the economic development of country. It is said, “Foreign trade is not simply a device for achieving productive efficiency but is an engine of economic growth.”

Many reasons certify this statement.

(i) Nation can optimally use its resources.

(ii) Technical know-how can be imported.

(iii) Surplus production can be exported.

Question. 4. Write short notes on India’s trade with:

a. Special Economic Zones (SEZ)

Answer:The term Special Economic Zone (SEZ) is an area in which business and trade laws differ from the rest of the country. SEZs are located within a country's national borders, and their aims include: increased trade

Question. 5. Discuss in detail the various Sectoral Performance of India’s External Sector.

Answer:The inward looking industrialisation process did result in high rates of industrial growth between 1956 and 1966. However, several weaknesses of such a process of industrialisation soon became evident, as inefficiencies crept into the system and the economy turned into an increasingly ‘high-cost’ one. Over a period of time this led to a ‘technological lag’ and also resulted in poor export performance.

Question. 6. What are PTA and FTA? Identify the key difference between the two.

Answer:

free trade is the unrestricted purchase and sale of goods and services between countries without the imposition of constraints such as tariffs, duties and quotas. Free trade is a win-win proposition because it enables nations to focus on their core competitive advantage(s), thereby maximizing economic output and fostering income growth for their citizens. Formerly insular economies such as China and India have expanded at much faster growth rates since they adopted free trade principles in the 1980s and 1990s, respectively.

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