INDEPENDENCE INTERDEPENDENCE AND DEPENDENCE

Determination of trading partners

Trading partners :- One of the two or more participants in an ongoing

business relationship Or country or company that another company or country does business with regularly.
There are number of theories that explain why do countries trade with

each other .Out of those theories we can make out that : Greater the dissimilarity among countries, the greater the potential for trade. For example, great differences in climatic conditions would lead to greatly differentiated agricultural products. Countries that differed in labor or capital intensities would differ in the types of products they could produce efficiently. And national differences in innovative abilities would affect how production of a product would move from one country to another during the products life cycle

Independence, Interdependence and Dependence

The concepts of independence, interdependence, and

dependence help to ex- plain world trade patterns and countries trade policies. They form a continuum, with independence at one extreme, dependence on the other, interdependence somewhere in the middle. There are no countries located at either extreme of this continuum; some tend to be closer to one extreme than the other.

Degree of Dependence Independencecomplete economic independence

Country has no reliance on other countries for goods, services, or technologies. Hinders countrys ability to borrow and adapt existing technologies

Interdependence trade based on mutual need

Neither trading partner is likely to cut off supplies or markets for fear of retaliation Governments may be pressured to sustain trade

Dependencedeveloping countries rely heavily on:

The sale of one commodity for export earnings 25 % of emerging countries sell one commodity One country as supplier or customer Industrialized countries

Independence
In a situation of independence, a country would have no

reliance on others for any g00ds, services, or technologies. Since all countries engage in trade, however, no country has complete economic independence from other countries, and all thus have at least some access to goods and services produced in a foreign country. In most countries, governmental policy has focused on achieving the advantages of independence without paying too high a price in terms of consumer deprivation. China and India, for example, have pursued economic independence much more vigorously than have Brazil and Mexico, with different results in different periods.

Independence
large countries typically depend much less on foreign trade

than do small countries, but even in large countries consumers could suffer through policies designed to promote more independence. The degree of suffering would, of course, depend on the type of product. The elimination of coffee or tea imports into the United States would probably involve less of a hardship than the cessation of foreign purchases of certain essential metals, such as manganese, cobalt, and chromium. In between are products that could be produced domestically, but at a much higher price. No country today seeks complete independence, but most try to forge their trade patterns so that they are minimally vulnerable to foreign control of supply and demand..

Dependence
In recent years, many developing countries have decried

their dependence, realizing that they are too dependent on the sale of one primary commodity and/or too dependent on one country as a customer and supplier. Because LDC economies are small, they tend to be much more dependent on a given industrial country than the industrial country is dependent on them Mexico, for example, depends on the United States for over 60 percent of its imports and exports, whereas the United States depends on Mexico for less than 5 percent of its imports and exports. Mexico can thus be much more adversely affected by U.S. policies than the United States can be affected by Mexican policies.

Interdependence
One way of limiting ones vulnerability to foreign

changes is through interdependence, or the development of trade relationships on the basis of mutual need. France and Germany, for example, have highly interdependent economies . Each depends about equally on the other as a trading partner, and thus neither is likely to cut off supplies or markets because the other could retaliate effectively.

Trade Relations of India

Until the liberalization of 1991, India was largely and

intentionally isolated from the world markets, to protect its economy and to achieve self-reliance. Foreign trade was subject to import tariffs, export taxes and quantitative restrictions, while foreign direct investment (FDI) was restricted by upper-limit equity participation, restrictions on technology transfer, export obligations and government approvals; these approvals were needed for nearly 60% of new FDI in the industrial sector. A large percentage of the capital flows consisted of foreign aid, commercial borrowing and deposits of non-resident Indians.

Trade Relations of India

India's exports were stagnant for the first 15 years after

independence, due to general neglect of trade policy by the government of that period. Imports in the same period, due to industrialization being nascent, consisted predominantly of machinery, raw materials and consumer goods. Since liberalization, the value of India's international trade has increased sharply, with the contribution of total trade in goods and services to the GDP rising from 16% in 1990 91 to 47% in 200810.[ India accounts for 1.44% of exports and 2.12% of imports for merchandise trade and 3.34% of exports and 3.31% of imports for commercial services trade worldwide.

Trade Relations of India

India's major trading partners are the European

Union, China, the United States of America and the United Arab Emirates. Major export commodities included engineering goods, petroleum products, chemicals and pharmaceuticals, gems and jwellery, textiles and garments, agricultural products, iron ore and other minerals. Major import commodities included crude oil and related products, machinery, electronic goods, gold and silver

Indias Export
India's exports during November, 2011 were valued at

US$ 22.32 billion which was 3.87 per cent higher in Dollar terms than the level of US$ 21.49 billion during November, 2010. Cumulative value of exports for the period April-November 2011 -12 was US$ 192.69 billion as against US$ 144.66 billion registering a growth of 33.21 per cent in Dollar terms over the same period last year.

Country-wise exports
Country-wise exports during 2011-12 (April-June) indicate that: UAE continued to remain the largest importer of Indian goods

with a share of 11.6 per cent followed by the US (10.4 per cent), Singapore (8.0 per cent), China (5.1 per cent) and Indonesia (3.0 per cent). These five countries together accounted for around 38 per cent of Indias total exports during April-June 2011. In spite of uncertainties prevailing in Europe, Indias exports to Germany, U.K., Netherlands, Italy and Belgium grew significantly during April-June 2011. Among major export destinations, US, Japan, China and Hong Kong were the economies where Indias exports showed lower growth during April-June 2011.

commodity-wise exports
As per the commodity-wise exports data released by Directorate

General of Commercial Intelligence and Statistics (DGCI&S) during 2011-12 (April-June) manufactured goods continued to maintain the largest share with 66 per cent, followed by petroleum products (18.4 per cent) and primary products (13.2 per cent). The rise in the share of manufactured goods essentially emanated from improvement in the share of engineering goods. Reflecting the robust demand in the new markets like Latin America and Africa, exports of engineering goods during April-June 2011 were more than double the level recorded during the corresponding period of previous year. Within engineering, exports of all major categories, viz., transport equipment, machinery and instruments, manufactures of metals, iron & steel and electronic goods have recorded higher growth

commodity-wise exports
Within manufacturing, other commodities groups,

viz., leather & manufactures, chemicals & related products and textiles & textile products witnessed higher growth during April-June 2011 as against the corresponding period of 2010-11. However, petroleum products and ores and minerals were the sectors which recorded decelerated growth during April-June 2011. Lower growth in commodities, viz., ores & minerals possibly reflects reduced demand for basic inputs due to concerns with regard to global slowdown.

commodity-wise exports
Furthermore, the impact of quantitative restrictions imposed on

exports of raw cotton was evident in negative growth recorded during April-June 2011. However, the export of raw cotton has now been placed on open general licensing by the government since July 31, 2011. During 2011-12 (April-June), the share of developing countries and Organization of the Petroleum Exporting Countries (OPEC) countries in Indias exports improved as compared to April-June 2010. It reflects the impact of governments policy focus on diversification of Indian exports to other markets, especially those located in Latin America, Africa, parts of Asia and Oceania.

Indias Imports
India's imports during November, 2011 were valued at

US$ 35.92 billion representing a growth of 24.55 per cent in Dollar terms over the level of imports valued at US$ 28.84 billion in November, 2010. Cumulative value of imports for the period April-November, 2011-12 was US$ 309.53 billion as against US$ 237.66 billion registering a growth of 30.24 per cent in Dollar terms over the same period last year

Indias Imports
Oil imports during November, 2011 were valued at US$

10307.1 million which was 32.28 per cent higher than oil imports valued at US$ 7792.1 million in the corresponding period last year. Oil imports during April-November, 201112 were valued at US$ 94116.5 million which was 42.67 per cent higher than the oil imports of US$ 65967.8 million in the corresponding period last year. Non-oil imports during November, 2011 were estimated at US$ 25615.3 million which was 21.69 per cent higher than non-oil imports of US$ 21050.2 million in November, 2010. Non-oil imports during April - November, 2011-12 were valued at US$ 215413.9 million which was 25.46 per cent higher than the level of such imports valued at US$ 171696.3 million in April - November, 2010-11.

Country-wise imports
During 2011-12 (April-June), share of developing countries in total imports of India was marginally lower than the corresponding period of 2010-11. On the other hand, the share of OECD and OPEC group of countries rose to 30.8 per cent and 35.0 per cent, respectively. Country-wise, China continued to be the largest source of imports with a share of 11.5 per cent in total imports, followed by the Switzerland, UAE, Saudi Arabia and Iraq. These five countries together constituted around 38.6 per cent of Indias imports. During April-June 2011, there was a distinct shift in source countries for imports. Switzerland became the second largest source country for imports replacing UAE while Iraq emerged as fifth largest source of import replacing Australia. In absolute terms, imports from Switzerland grew to more than double while that from Iraq recorded an increase of 271.6 per cent during the period. Import of items from Switzerland which recorded significant increase during the period include non-ferrous metals, machinery (except electrical & electronics) and electronic goods, etc.

commodity-wise imports
As per the latest available data on commodity-wise imports

released by Directorate General of Commercial Intelligence and Statistics (DGCI&S) for 2011-12 (April-June), petroleum and petroleum products continued to be the major item of Indias imports during April-June 2011, followed by capital goods and gold & silver. Import of gold & silver, in absolute terms, was more than double of that recorded during the corresponding period . The quantum of Petroleum, Oil, and Lubricants (POL) imports recorded a moderate growth of 4.6 per cent during April-June 2011 as against 7.2 per cent during the corresponding period of the preceding year 2010-11.

commodity-wise imports
Non-oil imports during 2011-12 (April-June) at US$ 79.4 billion

witnessed a growth of 23.7 per cent as against 40.3 per cent during the corresponding period of previous year. Deceleration in non-oil imports was mainly on account of decline in imports of export related items and certain bulk items, viz., fertilizers, manufactured items and iron & steel. Import growth in most of export-related items (viz., pearls, precious and semi-precious stones, chemicals, textile yarn and fabric) was either negative or lower possibly reflecting incipient signs of export moderation in these sectors in forthcoming months. Import of certain categories of capital goods either declined or showed decelerated growth raising concerns regarding domestic investment scenario.