GLOBAL TRADING ENVIRONMENT : RECENT TRENDS IN WORLD TRADE , TRENDS IN INDIA’S FOREIGN TRADE

1. GLOBAL TRADING ENVIRONMENT
● RECENT TRENDS IN WORLD TRADE
● TRENDS IN INDIA’S FOREIGN TRADE

2. TIMELINE OF WORLD TRADE
3000-1000
BCE
Waterborne Traffic
expansion of trade to
distant places,
mainly through
waterways
After 1000
BCE
Camels and
caravans
trade through land
connected Africa
and Asia.
After 300
BCE
Routes from the
west
extension towards
Europe
2nd Century
BCE
The Silk Route
connecting China, India
and Mediterranean.
Trade of goods in
exchange of gold. The
Silk Road introduced
global economics
1st to 15th century
CE
World Trade
silk route remains the
dominant route for trade. Entry
of African traders, Vikings in
Russia, Genghis Khan’s
plunder and silk route’s control
moved from China to Mongols.

3. TIMELINE OF WORLD TRADE (CONT. 1)
15th – 17th
Century
The Portuguese
Slave Trade ,
formation of Dutch
East India Company
17th Century
English trade in the east
formation of British East
India Company.
Established their
operations first at Surat,
then Bombay and later
Calcutta
18th Century
The triangular Trade
trade between three
countries, viz. Britain,
Africa and America.
1830 – 1870
This was the first true
period of globalization
1913 – 1918
World Wars
World War I put a halt on
international trade growth. The
war all across the world led to a
decrease in globalization which
lasted until after WWII..

4. TIMELINE OF WORLD TRADE (CONT. 2)
1929 – 1938
Great Depression
Europe lost more than the
rest of the world. Lesser
countries gained more
economic traction. More
than one-third of trade
stopped 1950 – 1973
The ‘Golden Age’
rebound of the
international economy
following the World
Wars and the Great
Depression
1973 – 1975
The Oil Crisis and the
recession during
these years put a halt
to the expansion
following WWII.
1975 – 2007
unstoppable growth in
trade
Asia’s share in
international trade grew
from 1/6 to 1/3.
2007 – Present
It appears the nearly 40 year
period of growth has come to a
halt and the openness of the
world’s economy has been
stagnant. The Trade War is
lowering expectations for the
future. Some may even
compare this to a pre-WWI
state of international trade.

5. RECENT TRENDS IN WORLD TRADE
The WTO’s latest World Trade Statistical Review 2019 confirms a continuous uncertainty
on global trade and a rise on trade-restrictive measures. The report highlights that trade
continues to be concentrated. The ten leading traders in 2018 represented more than half of
world trade, with the top five accounting for around 37% of global transactions. This has
been explained further under the following heads:
1. Trends in world trade, 2008-2018
2. World merchandise trade
3. World trade in commercial services
4. Which sectors increased or declined the most?
5. Recent improvements in: Global value chains, Digitized services trade

6. Trends in world trade, 2008-2018

7. ● The volume of world merchandise trade, as
measured by the average of exports and
imports, grew by 3.0 % in 2018, just above
the 2.9 % increase in world GDP over the
same period.
● The value of merchandise trade increased by
10 % in 2018. The increase in exports was
mostly driven by high energy prices while
Asia was the main contributor to an increase
in global imports.
● World merchandise exports of fuels and
mining products, manufactured goods and
agriculture grew by 23 %, 8 % and 5 %
respectively.
● Developing economies exported a total of
US$ 8,779 billion in 2018, of which US$ 193
billion were from least developed countries.
World merchandise trade

8. ● Trade in commercial services recorded
strong growth for the second year in a
row, rising by 7.7%.
● Information and communication technology
recorded the highest export growth (15 %)
among services sectors in 2018, led by
computer services.
● Growth in exports of commercial services was
highest in the Commonwealth of Independent
States (12 %) in 2018, partly due to the FIFA
World Cup in Russia.
● China was the leading exporter of commercial
services (by value) among developing
countries, with exports increasing by 17% in
2018.
World trade:commercial services

9. Which sectors increased or declined the most?
hich sectors increased or declined the most?
● Over the past ten
years, Hong Kong
China, India, Mexico
and Ireland rose the
most in world rankings
among the top 20
traders of goods and
services.
● Developing economies
outperformed or
equalled the
performance of
developed economies
in world trade in most
of the past ten years.

10. Global value chains
● More than two-thirds of world trade occurs
through global value chains (GVCs), in which
production crosses at least one border, and
typically many borders, before final assembly.
● The phenomenal growth in GVC-related trade
has translated into significant economic
growth in many countries across the globe
over the last two decades, fueled by
reductions in transportation and
communication costs and declining trade
barriers.
● But, at the same time, it has contributed to distributional effects that mean that the benefits of
trade have not always accrued to all, which has, at least in part, been a driver in the backlash
against globalization and the rise of protectionism and threats to global and regional trade
agreements.
● In addition, new technological developments such as robotics, big data, and the Internet
of Things (IoT) are beginning to reshape and further transform GVCs.

11. Digitized services trade
● Trade in services has expanded faster than trade in goods between 2005 and 2017, at
5.4 percent per year on average.
● Distribution and financial services are the services most traded globally, each
accounting for almost one-fifth of trade in services. The share of other services, such as
education, health or environmental services, is rising rapidly, but currently accounts for a
negligible proportion of overall trade in services.
● Four major trends will affect services trade in the future: digital technologies,
demographic changes, rising incomes, and the impact of climate change.
● These trends will create new types of services trade, affect the
demand for services, and disrupt trade in some services while creating
new markets in areas such as environmental services.
● According to the WTO Global Trade Model, the share in global trade of
the services sector could increase by 50 per cent by 2040.
Few examples of the emerging trends:
1.Similar trends can be seen in education, with the proliferation of e-learning
platforms such as Moodle and Massive Open Online Courses (MOOCs),
2.in entertainment, with the spread of streaming services such as Netflix or Spotify.
3. companies such as Uber and Airbnb demonstrate how even the most local sectors
can be radically transformed by new internet based business models.

12. TIMELINE OF INDIA’S TRADE
1948-51
India’s imports
exceeded its exports
Due to shortage of
food and raw
materials,resources
1951-56
First 5 year plan
Import of capital
goods increased
due to
industrialisation
1956-61
Second 5 year plan
and foreign
exchange crisis
Import of capital
goods and shortage
of food
1961-1966
Defense goods imported
Because of aggression
by China and Pakistan
1966-1974
India devalued the rupee by
36.5%

13. TIMELINE OF INDIA’S TRADE (CON. 1)
1974-79
Import liberalisation
lead to trade deficits
1980-89
Huge loan from
IMF
Import bill shot up
due to increase in
the prices of
petroleum
products
1989-1992
Import reached
record level due to
Gulf war
But exports failed
due to
disintegration in
soviet union 1992-1997
Eighth plan
Exports picked up
1997-2002
Due to crisis in South East
asia, japan , Russia, India’s
foreign trade declined

14. TIMELINE OF INDIA’S TRADE (CON. 2)
2002-07
Tenth plan; record
level deficit
2017-13
Increase in
imports of petrol
and oil
Increase in
exports but trade
deficit continued to
rise
2013-
PRESENT

15. RECENT TRENDS IN INDIA’S FOREIGN TRADE
India’s overall exports (Merchandise and Services combined) in April-March 2019-20 are
estimated to be USD 528.45 billion, exhibiting a negative growth of (-) 1.36 per cent over the
same period last year. Overall imports in April-March 2019-20 are estimated to be USD
598.61billion, exhibiting a negative growth of (-) 6.33 per cent over the same period last year.
1. Recent trade statistics
2. Composition of trade
● India’s merchandise trade
● India’s service trade
1. Volume of trade
2. Balance of trade
3. Future problem- impact of covid-19

17. The following growth drivers have shaped
merchandise exports growth:
Engineering Goods rose from USD 78,695.69 million in
2017-18 to USD 83,704.54 million in 2018-19, a growth of 6.36%.
Petroleum Products rose from USD 37,465.10 million in
2017-18 to USD 47,954.54 million in 2018-19, a growth of 28%.
Organic & Inorganic Chemicals rose from USD
18,508.48 million in 2017-18 to USD 22,573.87 million in 2018-19,
a growth of 21.97%.
Drugs & Pharmaceuticals rose from USD 17,282.81
million in 2017-18 to USD 19,188.46 million in 2018-19, a growth of
11.03%.
Cotton Yarn/Fabs./made-ups, Handloom
Products
etc., rose from USD 10,260.38 million to USD 11,206.44
million in 2018-19, a growth of 9.22%.
Electronic Goods rose from USD 6,393.12 million in 2017-
18 to USD 8,880.96 million in 2018-19, a growth of
38.91%.
Plastic & Linoleum rose from USD 6,851.12 million in
2017-18 to USD 8,609.08 million in 2018-19, a growth of 25.66%.
India’s merchandise trade

18. India’s service trade
● Service sector contributes
significantly to India’s
GDP (over 50%), FDI inflow
(about 50%), exports and
job creation.
● Services trade surplus has
been financing more than
50% of India’s merchandise
trade deficit.
● Services trade surplus
including remittances
finances about 110% of
India’s merchandise trade
deficit
● With the oil prices on the rise again and with increasing demand from India’s growing
economy, merchandise trade deficit is not likely to fall in the future. Thus, enhancing the
services trade surplus is crucial.

19. Volume of Trade:
The volume of India’s foreign trade has increased considerably during the planning
period. The pattern of India’s foreign trade was completely change as a result of economic
development and industrialisation during the planning period.It is no longer confined to a
few countries or few commodities.
Now India has trade relations
with almost all the countries of
the world. Exports cover over
9300 commodities to about 220
countries. Imports from about
180 countries accounts for over
8200 commodities. Changes in
the volume of India’s foreign
trade during the planning
period are shown in Table.

20. Increase in volume of trade in India

21. Balance of trade
After independence, India has been constantly experiencing an adverse balance of trade (i.e., the
difference between the value of exports and the value of imports) during most part on the planning
period.
There were, however, two exceptional years, i.e., 1972-73 and 1976-77, when the balance of trade
has shown small surplus, (i.e., of Rs. 104 crores and Rs. 72 crores respectively).

22. Trade impact of Coronavirus epidemic for India estimated at
348 million dollars: UN report
● The trade impact of the coronavirus epidemic for India is estimated to be about 348 million dollars
and the country figures among the top 15 economies most affected as slowdown of manufacturing in
China disrupts world trade, according to a UN report.
● Estimates published by United Nations Conference on Trade and Development (UNCTAD) said
that the slowdown of manufacturing in China due to the coronavirus (COVID-19) outbreak is
disrupting world trade and could result in a 50 billion dollar decrease in exports across global value
chains.
● The most affected sectors include precision instruments, machinery, automotive and communication
equipment.