3 To 9 Oct 22

Groww Digest
6 Day Course
Theme: international trade

Oct 3 to Oct 9, 2022
6 Day Course is a part of our newsletter

series, Groww Digest - all things personal
finance.
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Day 1: Monday
6 Day Course | Theme: international trade
Let’s explore what international trade is all

about, its pros, and its cons.
The simple idea: some people are just better at

doing certain things — even cheaply.
Everybody does what they are good at. And then

everybody exchanges and trades with everyone
else.
That way, everybody ends up with the best items

and services.
This is already happening in most small

economies — like a village. The farmer grows
grains. The doctor looks after people’s health.
The cobbler repairs shoes. So on.
International trade magnifies this.
This is why we use phones made by Chinese &

Korean companies, apps by American
companies, oil from middle-eastern countries,
and so on.
Page: 2
Day 2: Tuesday
Import: when products and services are

brought into a country to be used.
Export: when products and services are sent

outside a country to be sold.
A trade deficit occurs when a country imports

more than it exports.
India’s trade deficit in September 2022 was

26.72 billion USD. We imported $59.35 bn
worth of goods and services and exported
$32.62 bn.
USA’s trade deficit was $70.7b in July 2022.
Countries that export heavily have a trade

surplus instead of a trade deficit (they export
more than they import).
China had a trade surplus of $101.26b in July

22 as they manufactured and exported
heavily.
Page: 3
Day 3: Wednesday
Free trade.
A big idea behind free trade is that it allows

for business and trade to operate freely and
without much intervention.
Free trade does not encourage any business

nor does it try to save any failing business.
An example of free trade is what happened in

the US.
Many goods were manufactured in the US a

couple of decades ago.
Today, most of it is manufactured in other

countries and imported.
The US government did not try to save

companies operating in the US nor did it try to
stop companies from selling items
manufactured in other countries.
Page: 4
Day 4: Thursday
Protectionism.
This is the exact opposite of free trade.
It involves governments showing favourable

behaviour towards certain industries and
companies.
For example, to protect the companies from

competition from foreign companies, a
government might impose heavy taxes on
importing certain goods.
Or, the government may also provide tax breaks

and financial support to companies belonging to its
own country.
In more extreme measures, they might not allow

foreign products in certain categories.
Example: importing of drones is banned in India.

However, drone parts can be imported.
This was done to encourage and promote

development of the drone industry within India.
Page: 5
Day 5: Friday
Free trade vs protectionism.
India doesn’t allow importing of tyres. They

must be manufactured within India. But 100%
FDI is allowed in the telecom sector.
Similarly, USA — which is known for being pro

free-trade had imposed duties on the import
of steel and aluminium.
No major country in the world is fully a

proponent of free trade or of protectionism.
They all practice a balance between the two

approaches. Some countries are more
free-trade encouraging, some are more
protectionist.
This balance is constantly tweaked from time

to time.
Page: 6
Day 6: Sunday
We’ve reached the end of this week’s course that

started on Monday.
Here’s a test you should take. Get pen and

paper!
Question 1:
When a country imports more than it exports, it
is called:
-Trade deficit
-Trade surplus
Question 2:
Which of these countries has a trade deficit?
-USA
-China
Page: 7
Day 6: Sunday
Question 3:
Which of the two countries is generally known to
lean more towards free trade?
-USA
-China
Question 4:
Protectionist measures involve government
intervention and control.
-True
-False
Question 5:
India promotes:
-Free trade
-Protectionism
-Both
Page: 8
Day 6: Sunday
Answers:
Q1: Trade deficit;

Q2: USA;
Q3: USA;
Q4: True;
Q5: Both.
Page: 9
That’s it for this week!
Want to get Groww Digest in your email?
Click here: Get Groww Digest
See you next week!
—Groww Digest Team
Page: 10

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Groww Digest

Theme: international trade

6 Day Course is a part of our newsletter

Want to get Groww Digest in your email?

Click here: Get Groww Digest

Let’s explore what international trade is all

The simple idea: some people are just better at

Everybody does what they are good at. And then

That way, everybody ends up with the best items

This is already happening in most small

International trade magniﬁes this.

This is why we use phones made by Chinese &

Import: when products and services are

Export: when products and services are sent

A trade deﬁcit occurs when a country imports

India’s trade deﬁcit in September 2022 was

USA’s trade deﬁcit was $70.7b in July 2022.

Countries that export heavily have a trade

China had a trade surplus of $101.26b in July

A big idea behind free trade is that it allows

Free trade does not encourage any business

An example of free trade is what happened in

Many goods were manufactured in the US a

Today, most of it is manufactured in other

The US government did not try to save

This is the exact opposite of free trade.

It involves governments showing favourable

For example, to protect the companies from

Or, the government may also provide tax breaks

In more extreme measures, they might not allow

Example: importing of drones is banned in India.

This was done to encourage and promote

Free trade vs protectionism.

India doesn’t allow importing of tyres. They

Similarly, USA — which is known for being pro

No major country in the world is fully a

They all practice a balance between the two

This balance is constantly tweaked from time

We’ve reached the end of this week’s course that

Here’s a test you should take. Get pen and

Q1: Trade deﬁcit;

Want to get Groww Digest in your email?

Click here: Get Groww Digest

See you next week!

—Groww Digest Team

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