MGT-201 ASSIGNMENT

INTERNATIONAL TRADE,TRENDS IN
WORLD TRADE AND OVERVIEW OF
INDIA’S TRADE

Submitted By- Gable Kaura

(L-2020-A-016-BIV)
Submitted To-Dr.Sarishma Sharma
 INTERNATIONAL
TRADE
Trade is exchange of goods and services
between buyer and seller in consideration
of money.

Types of trade

1.) Domestic trade

It refers to the trade which takes place within country is
known as domestic trade.
2.) International trade
It refers to the trade which takes place beyond the
boundaries of a country. In simple words, trade among
many countries is called as international trade. It is also
known as foreign trade.
Features of international trade

 Participation of two or more countries

Because international trade takes place outside
boundaries of a nation. Thus it involves two or among
more than two countries.
 Heterogeneous market
The language, culture, trade, taste & preferences are
different from country to country. Hence, nature of
international trade Is heterogeneous.
 Different currencies
Int’l trade is among various nations and all countries
have their own currency.
Thus rate of exchange of currency will also be different.
Thus different currencies is one of the notable features
of int’l trade.
 Different national policies
The government policies and rules are also different at
int’l platform. Each country has its own policies of trade,
commerce, export, import, taxation etc.
 Large scale operation
 At int’l trade companies make production at large scale
to cover a huge market and huge demand from different
nations.
 Immobility of resources
Resources can be easily mobilised at national level but
not at int’l level.

Examples of int’l brands

US- Microsoft, Amazon, Facebook

China- ICBC
South Korea – Samsung
Switzerland - Nestle

Global Trade
Update

Q1 2021
World trade rebounds to record high in
 May 2021
Global trade Exports from Trade in Global trade
further rebounds East Asian goods is expected
in Q1 2021, economies drive surpasses to further
increasing by the rebound. In pre- rebound in
about 10 per cent other developing pandemic Q2. For 2021,
year-over-year and regions, trade levels, with global trade
4 per cent recovers more the trade is projected
quarter- over- slowly. in to grow by 16
quarter. Developed per cent, but
COVID-related
countries’ trade sectors remaining the outlook
improves. strong. Trade in remains
services continues uncertain.
to lag behind.

A faster recovery than in the last two trade recessions

Cumulative change in global trade from the start of each recession

+10
%

+5 Quarters into
recession
in 2020
2 2009
0 0
2
0
-5

-10 2015
 -15

-20

-25

-30

-35

Quarters to recover 4 8 12
from the start of the
recession
Source: UNCTAD calculations based on national statistics.
Global Trade Update 2

Global trade trends and forecasts

Amid economic disruptions from COVID-19, on the whole global trade held up relatively well in 2020. Much of the
trade resilience was due to East Asian economies, whose early success in pandemic mitigation allowed them to
rebound faster and to capitalize on booming global demand for COVID-19 related products.
The positive trends from the last few months of 2020 grew stronger in early 2021. In Q1 2021, the value of global
trade in goods and services grew by about 4 per cent quarter-over-quarter and by about 10 per cent year-over-year.
Importantly, global trade in Q1 2021 was higher than pre-crisis levels, with an increase of about 3 per cent
relative to Q1 2019. The trade rebound of Q1 2021 continues to be driven by the strong export performance of
East Asian economies. In Q1 2021, the value of trade in goods was higher than pre-pandemic level, but trade in
services remains substantially below averages. During Q1 2021, global trade of COVID-19 related products
remained strong.

World trade to continue recovering during 2021

Services Annual Quarterly World Trade

Goods Growth Growth (right axis)
Forecast
25% Preliminary 6
20%
15% 5
10%
4
5%

US$ trillion
0%
3
-5%
-10%
2
-15%
-20% 1
-25%
-30% 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2016 2017 2018 2019 2020 2021
Source: UNCTAD calculations based on national statistics.
Note: Quarterly growth is the quarter over quarter growth rate of seasonally adjusted values. Annual growth refers to the last four
quarters. Figures for Q1 2021 are preliminary. Q2 onward is a forecast.

Looking forward, trade is expected to continue growing into 2021. Trade growth is expected to remain stronger for
East Asia and developed countries, while still lagging for many other countries. The value of global trade in goods
and services is forecast to reach US$ 6.6 trillion in Q2 2021, equivalent to a year-over-year increase of about 31
per cent relative to the lowest point of 2020 and of about 3 per cent to the pre-pandemic levels of 2019.
Trade growth is expected to remain strong in the second half of 2021, the overall forecast for 2021 indicates an
increase of about 16 per cent from the lowest point of 2020 (19 per cent for goods and 8 per cent for
services).
Global trade outlook for 2021
The positive outlook for 2021 remains largely dependent on subsiding pandemic restrictions. Nevertheless, the
fiscal stimulus packages, particularly in developed countries, are expected to strongly support the global trade
recovery throughout 2021. The value of global trade should also rise due to positive trends across commodity
prices. Still, there is uncertainty about how trade patterns will be shaped throughout this period. The following
comprise the most important factors that will characterize global trade during 2021:

• UNEVEN economic recoVERy.

Some economies are posed to rebound stronger and faster than others. In particular, the economies of China and
the United States of America are expected to be the main drivers of global growth during 2021. This should
also have positive effects on countries whose trade is relatively more integrated with them (e.g. East Asian
countries, Canada and Mexico). On the other hand, COVID-19 is expected to continue disrupting the
economies and trade of many developing countries, at least throughout 2021.

• Reshoring and nearshoring trends.

The COVID-19 pandemic has introduced a substantial uncertainty into the operations of many global value
chains, providing incentives to scale down segmentation and shift production closer to consumers. The continued
development and implementation of regional trade agreements (e.g. RCEP and AfCFTA) and ongoing trade
tensions between major economies could also contribute to changes in production patterns of global value chains.
Moreover, enduring container shortages and increasing freight rates could provide further impetus for reshoring and
nearshoring trends.

• GoVERnment interVENTIONS and policies affecting international trade.

Governments are expected to use a wide range of policies as part of their post pandemic recovery plans.
Considering the ongoing diplomatic frictions among some of the major economies and the current difficulties within
the multilateral trading system, there is the risk that some of these policies may be trade restrictive. In
addition, efforts towards a more socially and environmentally sustainable recovery process could affect the
established patterns of global trade. For example, policies aimed to tackle carbon leakages through price
adjustments for imports are deemed to have an effect on international trade flows.

• Macroeconomic instability brought by higher LEVELS of debt.

The additional borrowing of governments to sustain their economies during the COVID-19 crisis could result
in financial instability. Even without a full-fledged global debt crisis, rising debt and obligations on its servicing
could bring instability. Any rise in interest rates would put pressure on both national and private borrowing
with negative repercussions on investments and international trade flows, especially for developing countries
whose fiscal policy space is more limited.

• Lasting changes in consumers’ spending.

Consumer behaviour has substantially changed during COVID-19. Demand increased in some sectors (e.g.
healthcare products, digital services, communication and home office equipment) and declined in some others (e.g.
transportation equipment, international travel and hospitality services). Some of these changes may be
enduring, if so they will be influencing the demand for foreign goods and services.
Trade trends for the major economies in Q1 2021
Import and export trends for some of the world’s major trading economies further illustrate the recovery patterns
of Q1 2021. With a few exceptions, trade in major economies recovered from the fall of 2020. However, the large
increases are due to the low base for 2020 and trade in many of the major economies was still below 2019
averages. The trend of a stronger recovery for goods relative to services is common to all major economies.
China, India, and South Africa have fared relatively better than other major economies during Q1 2021. China’s exports,
in particular, registered a strong increase not only from 2020 averages but also in relation to pre-pandemic levels. In
contrast, exports from the Russian Federation remained well below 2019 averages.

Imports and exports of major trading economies in Q1 2021

Q1 2021 RELATIVE TO 2020 AVERAGE Q1 2021 RELATIVE TO 2019 AVERAGE

IMPORT EXPORTS IMPORTS EXPORTS
S
GOODS 22 17 4% 8%
% %
Brazil
SERVICES 2% 2% 31 15%
%
GOODS 22 20% 20% 25%
%
China
SERVICES 3% 27% 23% 22%
GOODS 45 26 10 7%
% % %
India
SERVICES 14 2% 2% 3%
%
GOODS 11 16% 2% 5%
%
Japan
SERVICES 5% 2% 2% 24%
GOODS 18 19 9% 12%
% %
Republic of Korea
SERVICES 2% 13 20 2%
% %
GOODS 15 14% 9% 10%
%
Russian Federation
SERVICES 7% 5% 30% 28%
GOODS 25 36 4% 31%
% %
South Africa
SERVICES 1%* 26%* 37%* 62%*
GOODS 14 16% 7% 0%
%
United States
SERVICES 10 3% 14% 18%
%
GOODS 13 14 1% 6%
% %
European Union
SERVICES 1%* 7%* 13%* 6%*

Source: UNCTAD calculations based on national statistics.

Note: Growth rates of Q1 relative to year averages for 2019 and 2020. Seasonally adjusted and in US dollars. * denotes estimates.
 Regional trade trends in Q1 2021
Overall, trade continues to rebound more strongly for developing countries relative to developed countries. In Q1
2021, the value of merchandise imports and exports of developing countries is substantially higher compared to
Q1 2020 and also to Q1 2019 (by about 16 per cent). However, the trade recovery for developing countries
becomes much more muted when East Asian economies are excluded and disappears when only exports are
considered. The importance of East Asian economies in explaining the recovery in the trade of developing countries
is even more marked when considering trade among developing countries (South-South trade). When excluding trade
of East Asian developing economies, South-South trade has slightly declined in Q1 2021.

Developing countries’ trade rebound has been relatively stronger

Q1 2021 relative to Q1 2020 and Q1 2019
vs 2020 vs 2019
IMPORT EXPORT IMPORT EXPORT
Developed countries 12% 7% 5% 3%

Developing countries 18% 22% 16% 16%

South-South Trade 20% 17%

Developing countries (excluding East Asia) 9% 1% 6% 2%

South-South trade (excluding East Asia) 1% 1%

Source: UNCTAD estimates based on national statistics.
Note: Changes are year-over year. Data excludes intra-EU trade. Data does not include trade in services.

The trade patterns in Q1 2021 have been varied across geographic regions. While imports grew for all the
regions, the export rebound was largely confined to East Asian and Pacific economies. The value of exports remained
below averages for the Economies in Transition, the Middle East, South Asia and Africa. Although South
America’s exports increased relative to Q1 2020, they remained below 2019 averages.

But is largely because of East Asian and Pacific economies

Q1 2021 relative to Q1 2020 and Q1 2019
vs 2020 vs 2019 vs 2020 vs 2019

IMP. 13% 8% IMP. 13% 9%

3% 1% vs 2020 vs 2019 4%
EXP. EXP. 2%
IMP. 10% 2%
EXP. 7% 4%
vs 2020 vs 2019

IMP. 23% 19%

vs 2020 vs 2019
IMP. 7% 8% EXP. 33% 25%
EXP. 0% 2%

vs 2020 vs 2019

vs 2020 vs 2019
IMP. 11% 6%
IMP. 5%
11% 4% EXP. 2%
EXP.
6% 1% vs 2020 vs 2019

The designations employed and the presentation of material on any map in this work do not imply IMP.
the 19% 13%
expression of any opinion whatsoever on the part of the United Nations concerning the legal status of any
country, territory,
city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries.

Source: UNCTAD estimates based on national statistics.

Note: Changes are year-over year. Data excludes intra-EU trade. Data does not include trade in services.
 Global trade trends at the sectoral level in Q1 2021
The ongoing trade recovery comprises most sectors. During Q1 2021, trade continued to rebound not only in
sectors re- lated to COVID-19 (e.g. pharmaceuticals, communication and office equipment) but also increased for most
other sectors, such as minerals and agri-food. In contrast, the energy sector continues to lag behind and
international trade of transport equipment remains well below averages.

A broad based trade recovery for Q1

2021
18%
Agri-food
17%

relative to Q1 2019 Apparel 5%

20%
relative to Q1 2020
12%
Chemicals 18%
20%
Communication
37%
Equipment

-6%
Energy
-5%
19%
Machinery 23%

Metals 20%
29%

Minerals 33%
42% 42%
Office 19%
Equipment 38%
38%
Other 18%
Manufacturing 33%

Pharmaceuticals 27%
13%
Precision 11%
Instruments 16%

Road Vehicles 8%
16%

Textiles 16%
28%
-34% Transport
-19% Equipment

Source: UNCTAD calculations based on national statistics. Note: Percentage changes in world trade are year-over-year. Changes are estimated from HS6 digits data of
China, European Union, and United States. Data excludes intra-EU trade.
Annex 1: Export performance and volatility in Q4 2020.
COUNTRIES EXPORT EXPORT COUNTRIES EXPORT EXPORT
PERFORMANCE VOLATILITY PERFORMANCE VOLATILITY
Albania 0.64 0.19 Lesotho 0.67 1.16
Algeria 0.34 0.39 Madagascar 0.06 0.30
Angola 0.38 1.91 Malawi 0.72 1.31
Argentina 0.16 0.30 Malaysia 0.56 0.09
Armenia 0.57 0.71 Mali 0.56 0.96
Australia 0.58 0.27 Mauritius 0.67 0.70
Azerbaijan 0.26 2.81 Mexico 0.63 0.10
Bahrain 0.44 0.72 Morocco 0.69 0.05
Bangladesh 0.65 0.01 Mozambique 0.59 0.92
Belarus 0.66 0.33 Myanmar 0.37 0.38
Benin 0.44 1.07 Namibia 0.30 0.78
Bolivia (Plurinational State of) 0.79 0.50 Nepal 0.78 1.52
Bosnia and Herzegovina 0.70 0.05 New Zealand 0.46 0.07
Brazil 0.39 0.13 Nicaragua 0.38 0.10
Cambodia 0.35 0.10 Nigeria 0.13 0.79
Cameroon 0.25 1.01 Norway 0.59 0.43
Canada 0.56 0.17 Oman 0.88 1.04
Chile 0.57 0.22 Pakistan 0.71 0.10
China 0.71 0.09 Panama 0.49 0.33
Colombia 0.48 0.27 Papua New Guinea 0.57 0.70
Costa Rica 0.54 0.03 Paraguay 0.55 0.90
Côte d'Ivoire 0.35 0.64 Peru 0.75 0.07
Dominican Republic 0.64 0.04 Philippines 0.51 0.11
EU-27 0.57 0.01 Qatar 0.46 0.70
Ecuador 0.61 0.06 Republic of Korea 0.52 0.07
Egypt 0.59 0.57 Republic of Moldova 0.40 0.11
El Salvador 0.81 0.10 Russian Federation 0.47 0.09
Ethiopia 0.44 1.45 Saudi Arabia 0.56 0.42
Gabon 0.35 1.68 Senegal 0.52 0.87
Georgia 0.53 0.50 Serbia 0.68 0.14
Ghana 0.45 0.08 Singapore 0.46 0.01
Guatemala 0.60 0.61 South Africa 0.76 0.12
Guyana 1.00 0.91 Sri Lanka 0.42 0.22
Haiti 0.55 0.04 Switzerland 0.48 0.03
Honduras 0.46 0.98 Taiwan, Province of China 0.58 0.01
Hong Kong (China) 0.56 0.05 Thailand 0.43 0.04
Iceland 0.42 0.34 Togo 0.43 2.34
India 0.53 0.13 Tunisia 0.59 0.05
Indonesia 0.56 0.04 Turkey 0.68 0.05
Iran (Islamic Republic of) 0.59 0.38 Uganda 0.80 0.25
Israel 0.53 0.05 Ukraine 0.61 0.04
Jamaica 0.25 1.39 United Arab Emirates 0.48 0.08
Japan 0.58 0.02 United Kingdom 0.48 0.34
Jordan 0.33 0.61 United Republic of Tanzania 0.81 0.25
Kazakhstan 0.33 0.14 United States of America 0.48 0.03
Kenya 0.41 0.03 Uruguay 0.61 0.14
Kuwait 0.62 0.42 Venezuela (Bolivarian Rep. of) 0.07 0.11
Lao People's Dem. Rep. 0.69 0.23 Viet Nam 0.59 0.02
Lebanon 0.00 1.97 Zambia 0.71 0.28

Source: UNCTAD estimates based on national statistics.

Note: Export performance is a composite indicator which includes growth rates, performance vs peers, and competitiveness in major and dynamic markets. A
greater score implies higher export performance. Export volatility tracks export performance across the last 6 months to identify volatility patterns. A greater score
implies higher export vulnerability. Data excludes intra-EU trade.
Overview of
India’s trade
Foreign trade
Trade between residents of India and residents
of other countries of world. Eg trade between
India and us

Export- goods consigned from India to other

countries is known as india’s export.
Import- goods consigned from other countries
to India are known as india’s import.

Importance of foreign trade

 Help countries in utilising it’s natural
resources.
 Helps a country for the export of its
surplus production
 It enables a country to acquire
necessary supply and other
equipments for its economic
development from the abroad
Foreign trade of india
1.) Before the independence
2.) After the independence
These both are divided into four
categories
 Volume of trade
 Composition of foreign trade
 Direction of trade
 Balance of trade

Before the independence

1.) Volume of trade
At that time it was not so much,. In
1939, it was Rs. 321 crore and in 1947 it
was Rs. 792 crore.
2.) Composition of foreign trade
At that time , very few commodities
were on the foreign trade list. India
mainly used to import finished goods,
machines, chemicals, iron and steel etc
& major exports were cotton textile,
raw cotton, food grains, tea, oilseeds
etc.
 3.) Direction of trade
Most of india’s trade was major exports
with England, 34% of total export went
to England and 31% of total import
came from England.
4.) Balance of trade
Before independence, india’s trade was
always in surplus, in 1939, it was
favourable by Rs. 17 crore and in 1947
it was favourable by Rs. 31 crore. In
1947, it was reduced by 14 crore.

After the independence

1.) Volume of trade

After independence, volume of
india’s trade increased substantially.
In 1947, it was Rs. 792 crore while in
2018 it becomes Rs. 362371 crore.
2.) Composition of foreign trade
Before independence, India was
exporting only traditional goods like
tea, jute, skins etc. But now it
exports modern goods like software,
readymade garments etc. And it was
importing only finished goods but
now it imports various capital goods
and new materials.
Change in composition of
exports
 Decline in percentage
share of agri. Products in
total exports
 Decline in percentage
share of conventional
items in total exports.
 Increase in percentage
share of manufactured
goods in total exports
 Increasing importance of
exports of gems & ready
made garments
 Exports of petroleum
products
 Increase in export of
services
Change in composition of
imports
 Decline in imports of agri.
Products
  Increase in import of
petroleum products
 Increase in import of
capital goods
 Increase in import of
chemical fertilizers.

3.) Direction of trade

After independence, trade is not
restricted to few countries. It take
countries within like OPEC & OECD
countries and also to eastern Europe
& to developing countries
4.)Balance of trade
Before independence, there was
always surplus in trade but after
independence it has changed.
Sometimes it is favourable &
sometimes unfavourable and
sometimes it is in equilibrium
Types of BOT

BOT

UNFAVOURABLE EQUILIBRIUM IIN

FAVOURABLE BOT
BOT BOT
EXPORTS>IMPORTS
EXPORTS<IMPORTS EXPORTS=IMPORTS

Main features of india’s

foreign trade
 Increasing share of GNP
 Less percentage in world trade
 Oceanic trade
 Increase in volume and value of
trade.
 Change in composition of
exports and imports.
 Change in direction of foreign
trade.
 Foreign trade by government.
 Export-import ratio.