INTERNATIONAL ECONOMICS

Fifth Edition
By

Francis Cherunilam

1 Introduction
 Cherunilam; International Economics, Chapter 1

What is International Economics ?

International Economics is that branch

of economics which deals with the economic
interdependence among countries and that
examines the effect of such interdependence
and the factors which affect it.

Slide 1.1
 Cherunilam; International Economics, Chapter 1

Components of International Economics

heoretical International Economics Descriptive International Economic

Explains international economic

transactions and the relevant
institutional environment

Pure Theory Monetary Theory

Deals with bases and Deals with Bop

patterns of trade and international
monetary system

Slide 1.2
 Cherunilam; International Economics, Chapter 1

Components of International Economics

Descriptive International Economics

Pure International Economics Explains international flow of goods,
Encompasses pure services, factors etc and the
and monetary theory relevant international institutional
environment

Slide 1.3
 Cherunilam; International Economics, Chapter 1

Theoretical International Economics

Pure theories Monetary theories

Explains bases of trade; Deals with matters pertaining to
effects of trade on production, Bop and international monetary
consumption, income distribution and System
factor & product prices, effect of trade
barriers; gains from trade;
trade - growth interrelationship

Slide 1.4
 Cherunilam; International Economics, Chapter 1

Factors Promoting Global Economics Integration

 International Trade
 Production Sharing/Global Sourcing
 International Investment and Production
 Cross-border Mergers and Acquisitions
 Economics integration and Trade Pacts
 Transplants
 Business Strategies

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 Cherunilam; International Economics, Chapter 1

Some Indicators of India’s Position in the Global

Economy
Share (Percentage) Rank
Population (2006) 17 2
GNI (2006) 1.8 10
GNI measured at PPP (2006) 6.3 4
Human Development Index (2005) -- 128
Export of goods (2006) 1.0 28
Import of goods (2006) 1.4 17
Export of services (2006) 2.7 10
Import of services (2006) 2.4 13
Foreign Direct Investment inflow (2006) 1.3 --

Slide 1.6
 Cherunilam; International Economics, Chapter 1

Economic Performance of India : A

Comparison
Region/ Output Growth rate GDP Per capita
Country (Annual Percentage Change) Annual Growth
rate
(Percentage)

1975 - 1991 - 2001 2002 2003 2004 2005 2006 2007 1975 - 1990 -
1995 2000 2005 2005

World 3.0 2.9 1.5 1.8 2.6 4.1 3.4 4.0 3.4 1.4 1.5

Developing 3.9 5.0 2.6 3.8 5.1 7.1 6.5 6.9 6.4 2.5 3.1
countries

India 4.8 6.0 5.0 4.0 7.1 8.5 9.2 9.2 8.5 3.4 4.2

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 Cherunilam; International Economics, Chapter 1

Salient Features of India’s Economic Liberalisation

1. Abridgement of the role of public sector and expansion of the scope of

private sector

2. Removal of entry and growth restrictions

3. Liberalisation of foreign investment

4. Reform of trade policy

5. Capital market reforms

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 Cherunilam; International Economics, Chapter 1

Useful Website Links

World Bank: World Development Report :

http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/EX
TWDRS/0,,contentMDK:20227703~pagePK:478093~piPK:477627~theSitePK:
477624,00.html
UNCTAD: Least Developed Countries Report:
http://www.evd.nl/zoeken/showbouwsteen.asp?bstnum=223026&location=
IMF: World Economic Outlook :
http://www.imf.org/external/pubs/ft/weo/2008/01/index.htm
Govt. of India: Economic survey:
http://www.oecd.org/document/5/0,3343,en_2649_33733_39428741_1_1_1_1,
00.html

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