Economics(Paper-4) - Shivaji University
Economics(Paper-4) - Shivaji University Economics(Paper-4) - Shivaji University
development. The foreign capital can be paid out through the effective trade policy at international level. But the fact is that foreign trade is not favourable to undeveloped countries. To find the solution for this problem, private foreign Investment, multinationals and Globalization are the measures to have an economic development of developing nations. 4.2 Subject Matter : In this unit we are going to study the various aspects of International Measures for the economic development as under – 4.2.1 Role of Foreign Trade in Economic Development : Many economists like Ricardo, Haberler,T. S. Mill. Wortkin, Myint have argued that foreign trade is an essential condition to have an economic development. Thus, the classical and new-classical economists attached much importance to international trade in country’s economic development and regarded it as egine of growth. The Economists like G. Myrdal, Prebisch, Singer, have enunciated that historically foreign trade has led to international inequality where the rich countries have become rich at the expenses of the poor countries. These two approaches tells us the role of foreign trade in economic development of an economy. A) Role / Importance of Foreign Trade in Economic Development : Classical and New-classical Economists have argued that foreign trade possess great importance for developing economies. According to Haberler…. ‘International Trade has made a tremendous contribution to the development of less developed countries in 19 th and 20 th centuries and can be expected to make an equally big contribution in the future. Thus, free trade is the best policy from the point of view of economic development. 1) Rise in National Income : When a country specializes in the production of a particular commodity, due to foreign trade and division of labour, at lower cost it exports to other countries which raise the national income. Thus, trade breaks the vicious circle of poverty and promotes economic development. 2) Widens the Market : In developing country a small size of domestic market fails to absorb market surplus. As a result, income, purchasing power and savings and investment becomes very less. But fact is that foreign trade widens the market and increases investment, income and savings efficiently. Myint has used the smith’s “Vent for surplus” theory for developing countries to have gains from international trade. This theory states that foreign trade provides a better opportunities to developing countries to produce and export primary products. The following diagrame exhibits “Vent for surplus theory.” 123456789012345678901234567890121234567 123456789012345678901234567890121234567 46 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567
Y P S C Import E D P O X1 X2 B X Export Explaination of a Graph : OY = imports OX = Exports AB = Production possibility curve Before Foreign Trade E = production level OX1 = Primary products produces consumes and XiE = Manufacturing products After Foreign Trade : D = Production Point level OX1 to OX2 = Exports Primary products. XPP1 = International Terms of Trade. OX1 to OX2 primary products required mid market to export which is possible through foreign Trade. 3) Reduction in unemployment and under employment : According to Watkins “staple theory of economic growth” unemployment, under employment have been reduced and savings investment, have increased. Thus, the foreign trade benefits directly to the developing countries in their economic development. 123456789012345678901234567890121234567 123456789012345678901234567890121234567 47 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567
- Page 1 and 2: B. A. Part-III : Economics Paper 4
- Page 3 and 4: 7) “ Economic development is a pr
- Page 5 and 6: underdeveloped countries in compari
- Page 7 and 8: developing states through the progr
- Page 9 and 10: 7) Goals : objectives. 8) Disguised
- Page 11 and 12: UNIT - 2 Theories of Economic Growt
- Page 13 and 14: structure of the traditional societ
- Page 15 and 16: help of example, “If we take marg
- Page 17 and 18: promote and enhance social welfare.
- Page 19 and 20: B The Closed Economy : Assumptions
- Page 21 and 22: B The Process of Economic Expansion
- Page 23 and 24: consider the possibility of the cap
- Page 25 and 26: gap between income and expenditure
- Page 27 and 28: disequalising force is trade, which
- Page 29 and 30: 8. Rostow developed his theory in
- Page 31 and 32: UNIT - 3 Domestic Measures for Econ
- Page 33 and 34: all kinds. Hence, capital formation
- Page 35 and 36: policy. But these trio are and may
- Page 37 and 38: 1) Provision of food to evergrowing
- Page 39 and 40: the country.The central bank contro
- Page 41 and 42: 7) Public Spending : Fiscal policy
- Page 43 and 44: 3.3 Conclusion / Summary : Capital
- Page 45: UNIT - 4 International Measures for
- Page 49 and 50: for the developing countries has al
- Page 51 and 52: they are entitled to get dividend a
- Page 53 and 54: 4) Infrastructure : Since last thre
- Page 55 and 56: III) Advantages of Multi-national C
- Page 57 and 58: oundaries of nation states. 2) Mean
- Page 59 and 60: 4.3 Summary : 1) Role of Foreign Tr
Y<br />
P<br />
S<br />
C<br />
Import<br />
E<br />
D<br />
P<br />
O<br />
X1<br />
X2<br />
B<br />
X<br />
Export<br />
Explaination of a Graph :<br />
OY = imports<br />
OX = Exports<br />
AB = Production possibility curve<br />
Before Foreign Trade<br />
E = production level<br />
OX1 = Primary products produces consumes and<br />
XiE = Manufacturing products<br />
After Foreign Trade :<br />
D = Production Point level<br />
OX1 to OX2 = Exports Primary products.<br />
XPP1 = International Terms of Trade.<br />
OX1 to OX2 primary products required mid market to export which is possible<br />
through foreign Trade.<br />
3) Reduction in unemployment and under employment : According to Watkins<br />
“staple theory of economic growth” unemployment, under employment have been<br />
reduced and savings investment, have increased. Thus, the foreign trade benefits<br />
directly to the developing countries in their economic development.<br />
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47<br />
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