Determinants of trading partner

1. Determinants Of Trading Partners
In INTERNAIONAL BUSINESS

2. • The two largest goods traded by India are Mineral fuels
(refined / unrefined) and gold (finished gold ware / gold
metal).
• Trade is by its very nature a reciprocal activity.
• From April through June, India’s top trading partners
were China, the United Arab Emirates (or UAE), and the
US.
• India had the largest trade deficit with China in 2014. Its
trade deficit was $36.2 billion.
Among its top ten trading partners in the year, India
maintained a trade surplus with four countries—the US,
UAE, Hong Kong, and Singapore.

4. Balance of Payment
• It is a double entry system of record of
all economic transactions between the
residents of the country and the rest of
the world carried out in a specific period
of time.
• It takes into account the export and
import of both visible and invisible
items.

5. BOP statement
includes
• Capital received by residents
• Services rendered
• All the receipients on account of
goods exported
• Payment of residents
• Capital transferred to foreign

6. Components of
BPP
• Current account
• Capital account

7. Current account
• It includes visible exports and
imports, and invisible items like
receipts and payments for various
services.
• It contains credit and debit items.
• Credit includes merchandise exports
and invisible exports.
• Debt includes merchandise imports
and invisible imports.

8. Capital account
• It is the difference between the receipts
and payments on account of capital. It refers
to all financial transactions.
• The capital account involves inflows and
outflows relating to investment, short term
borrowings/lending.
• Account will show either surplus or
deficit.
• It includes : Private foreign loan flow,
movement in banking capital, reserves ,
gold movement etc.

9. Government Interference
Tariff and Non Tariff Barriers
• Tariff Barriers – Taxes and duties
government input on certain things.
Tariff is a tax on goods which one
nation imports from another. Many
nations se tariff to protect their own
industry from foreign competition.

10. Classification of Tariff –
1. On the basis of origin and destination
:
• Export duties
• Import Duties
• Transit duties
2. On the basis of Quanification :
• Specific duty
• Ad voloren duty
• Compound duty

11. 3. Between different countries :
• Single column
• Double column
4. Tariff are served :
• Revenue Tariff
• Protective Tariff
• Countervailing and antidumping
duties

12. • Non Tariff Barriers – Non tariff
barriers are used by developing
countries to prevent foreign exchange
outflow. They are used by developed
economy to protect domestic industry
which has lost International
competitiveness or which are politically
sensitive for their own countries. This
includes Import licensing, Foreign
exchange regulation, cancellation of
imports etc.

13. Types of Non Tariff barriers–
1.Voluntary export restraints
(VER)
2.Administrative policies
• Health and Product standards
• Custom procedures
• Consular formalities
• Licensing
• Environment protection law
• Foreign exchange regulation

14. CHANGE IN COMPETITIVENESS
 Competitiveness pertains to the ability and
performance of a firm, sub-sector or country to sell
and supply goods and services in a given market.
 Trade Policy can be used to establish unilaterally and
multilaterally negotiated rule of law .
 Competitiveness results from a comprehensive
policy that both maintains a favorable global trading
environment for producers.
 These include incentives in the form of export
promotion efforts and export financing.

15. SPECULATION
 These include transactions ranging from anticipation
of seasonal movements in exchange rates for the
extreme one, viz., flight of capital.
 In periods of political uncertainty, there is heavy
speculation in foreign money.
 These speculative activities bring about wide
fluctuations in exchange rates.
 A floating exchange rate can still have rapid
appreciation and depreciations because the situation
of an economy can change frequently.

16. Inflation
TYPES OF INFLATION:-EFFECT OF INFLATION:-
 ON THE BASIS OF DEGREE
OF THE GOVERNMENT
CONTROL
 ON TH BASIS OF
POLITICAL INFLATION
 ON THE BASIS OF SCOPE
 INVESTMENT
 INTERST RATE
 UNEMPLOYMENT
 DECRECING IN
PURCHASING POWER

17. Causes of
Inflation
 Demand pull
 Cost push
 Imported

18. Monetary measures:-
Bank rate
 CRR
 open market operation
Fiscal measures :-
Increasing In Taxes
Increasing in surplus
budget
Increasing in saving
Controlling INFLATION

19. ECONOMIC GROWTH
 Benefit of economic
growth
Higher average income
Lower unemployment
Lower govt. borrowings
Imported public services
Investment
 Potential cost of
economic growth
 Inflation
 Boom and bust
economic cycle
 Enivermental cost
 Inequalities