International Business and Practices International Trade Theories: Mercantilism Theory Absolute Advantage Theory EXIM Policy 2015-2020

1. International Business and Practices
Presentation
Group 1
Presented By:
Soni Yadav – 111
Shweta Srivastava – 127
Vaibhav Kansal – 131
Ashwani Kumar – 121
Subin Nambiar – 135
Ashish Pawa – 116
Mohd. Saif Alam – 130
Prepared for:
Dr. Girish Kathuria

2. THEORY OF
MERCANTILISM.

3. INTRODUCTION:-
 It was given by William petty, Thomas mum, Antoine de Montchrestien model around
300 years ago.
 Base of this theory was “ commercial revolution”
- Local economies → National economies.
- Feudalism → Capitalism.
- Rudimentary trade → International trade.
 It superseded the feudal organization in western Europe, Holland France, United
Kingdom, Belgium, Portugal and Spain.

4.  To export more import less and to receive in exchange gold is
called MERCANTILISM.
 Positive Balance of trade.
 Exercised much control over economic life.
 “ world only contained a fixed amount of wealth and that to
increase a country wealth.”

5. MERCANTILISM ADVANTAGES:-
 Economic growth.
 Jobs and entrepreneurship.
 A stronger and more influential nation.

6. DISADVANTAGES OF MERCANTILISM:-
 Conflicts.
 Short term advantage.

7. THEORY OF ABSOLUTE
ADVANTAGE.

8. INTRODUCTION:-
• This theory was proposed by Adam Smith in 1776.
• The country has an absolute advantage in the production.
• The country should specialize in the production of goods.
• The theory refers to the ability to produce more good and services
then its competitors.
• Trade the goods for the goods produced by other countries.

9. SIMPLE TERMS OF ABSOLUTE ADVANTAGE:-
 Division of labor.
 Free trade among countries can increase a country’s wealth.
 Enable country to provide various goods and services to its people.
 Lower cost of production.
 Specialized production.

10. ADVANTAGES:-
 NATURAL ADVANTAGE:-
1. Natural Resources.
2. Climatic Conditions.
Example: A. India - Production of Rice, wheat, sweet mangoes, grapes, Tea, Coconuts,
Cashew nuts, cotton, etc.
B. Sri Lanka - Production of Tea & Rubber.
C. USA - Production of wheat.
 AQUIRED ADVANTAGE:-
1. Technology.
2. Skills.
Example : Japan - Advantages in steel production through imports of steel & coal
England - Production of Textiles France - Production of Wine.

11. LIMITATIONS:-
 Country size varies.
 Country by country differences in specializations.
 Neglected Transport cost.
 Theory is based on an assumption that Exchange rates are stable and
fixed.
 It also assumes that labor can switch between products easily with
same efficiency which is not possible.

12. EXIM POLICY (2015-2020).

13. WHAT IS EXIM POLICY?
EXIM Policy or Foreign Trade Policy is a set of guidelines and
instructions established by DGFT in matters related to the
import and export of good in India.

14. • EXIM Policy replaced the earlier Import Export Act in 1992.
• 5 year policy- governed by DGFT.
• Supplement policy to this every year.
• Contains general provision regarding exports and imports, promotional
measures, duty exemption schemes, export promotion schemes, special
economic zone program.
• Current EXIM Policy- 2015-2020.
• Main target is to double India’s exports.
FEATURES:-

15. OBJECTIVES:-
 To provide quality consumer products at reasonable prices.
 Opportunities and encourage the attainment of
internationally accepted standards of quality.
 To enhance the techno local strength and efficiency of Indian
agriculture, industry and services, thereby, improving their
competitiveness.

16.  The main objective of the Government's EXIM Policy
is to promote exports to the maximum extent.
 To enhance the reverse of foreign exchange.
 To allow for hassle free exports and imports.

17. VIEW POINTS ON EXIM POLICY:-
 Simplification of merger and reward schemes (MEIS and
SEIS).
 Incentives (Duty credit scrip).
 More emphasis on quality and standards.
 Reduced transaction costs, and complex procedures.
 Recognition of status holders.
 Trade deficit.

18.  Inward FDIs should increase.
 Need to improve manufacturing sector.
 Tariffs.
 Boost to “MAKE IN INDIA”.
 India should adopt trade protectionism.
 Less import = More Employment.

19. Thank you!