Indian Economy and Policy

Directions: Answer the given question based on the following passage.

The major reason behind a lesser growth in industry in Punjab is________

Punjab is a state of India, located in the northwestern part of the subcontinent. It is bounded by the Indian states of Jammu and Kashmir to the north, Himachal Pradesh to the northeast, Haryana to the south and southeast, and Rajasthan to the southwest and by the country of Pakistan to the west. Punjab in its present form came into existence on November 1, 1966, when most of its predominantly Hindi-speaking areas were separated to form the new state of Haryana. The city of Chandigarh, within the Chandigarh union territory, is the joint capital of Punjab and Haryana. The word Punjab is a compound of two Persian words, panj (“five”) and āb (“water”), thus signifying the land of five waters, or rivers (the Beas, Chenab, Jhelum, Ravi, and Sutlej). The word’s origin can perhaps be traced to panca nada, Sanskrit for “five rivers” and the name of a region mentioned in the ancient epic the Mahabharata. As applied to the present Indian state of Punjab, however, it is a misnomer: since the partition of India in 1947, only two of these rivers, the Sutlej and the Beas, lie within Punjab’s territory, while the Ravi flows only along part of its western border. The state of Punjab has also gained true recognition among all individuals due to the presence of forestry, tourism, agriculture, industries and minerals. Livestock is also one of the other key highlights of the state. However, the state of Punjab has scarcity of basic minerals and fuels. This is one of the prime factors behind the poor rate of industrial development. Agriculture has been always a strong point in the economy of the state. The state has indeed made a huge impact in the overall economy of the country as far as the production of wheat is concerned. A few of the agriculture-based industries associated with the state include paper, wood, beverages and food products.

Directions: The question is a logical sequence of statements with a missing link, the location of which is shown parenthetically. From the five choices available you are required to choose the one which best fits the sequence logically. Any classical economist will tell you that for India to go beyond 7 per cent GDP growth, the investment rate and capital productivity need to be stepped up. (.) There is some truth in this. Compared to Southeast Asia and the newly industrialised economies, our productivity rates are abysmal, though improving.

The best reason for Britain not going in for importing doctors and nurses could be that

Directions: The passage below is followed by a question based on its content. Answer the question on the basis of what is stated or implied in the passage.
PASSAGE – I
The good thing about India is nothing remains secret for long. Somehow, word gets out and into the media, and then a heated discussion begins. And thus, some bad and malafide decisions are mercifully thwarted. These are the few saving graces of our democracy as it has come to be.
The latest decision in the pipeline is the UK's National Health Services negotiating with Indian medical institutions to treat British patients in India. This cannot be left merely to the NHS and a few private medical organizations in India. There are larger issues involved that need detailed discussions. The issues range from the macro to the micro, from globalisation to overcrowding in Indian hospitals. Bureaucrats, experts, NGOS must have a say as it impacts ordinary Indians too. The purpose of discussion is not to obstruct, but to ensure an equitable decision is taken in the larger public interest and to ensure that the privileged few–be they Indian or British–do not profit at public expense.
As with every decision, there are pros and cons. A few Indian doctors and hospitals will certainly profit. But the cons are far many too to ignore. As it is, our high-quality hospitals are overcrowded with Indian patients. A waiting list already exists, which of course the privileged short-circuit using connections. So allowing British patients to use our facilities could further clog our hospitals, deny beds to Indian patients. That's clearly unacceptable. But it can happen. Remember the money-spinning Apollo hospitals, controversy-ridden for not treating enough poor patients as it is mandated to do.
One can see why sending patients to India is an easy, cheap option for the British. Even including airfare, the total expense would be much cheaper. Our doctors and nurses are inexpensive by world standards, and extremely competent at that. Also some of our private hospitals, for instance the Escorts Hospital in New Delhi, are world-class. On the other hand, Britain's National Health Service (NHS) is overburdened. Waiting lists for even routine operations like cataract run into months. The best option for Britain would be to reform their NHS, upgrade hospitals and import more doctors and nurses. But that they don't want to do. Money is always a constraint and immigration is now a touchy political issue. It appears the British government and public want to have their cake and eat it too – they want good medical service, but don't want to foot the social and political cost of importing labour. So if doctors cannot or should not come to the patients, the patients must go to the doctors. So go abroad. Not only the British, but even Scandinavians who find themselves stuck at the rear end of interminable waiting lists, are increasingly going to France and Germany for surgeries and other serious medical interventions. India can be even more attractive–it's further, but still cheaper. To buttress their argument with moral ballast, British authorities sanctimoniously claim that by bringing their patients to  India, they  are averting brain  drain. India’s  problem is not  brain drain but excess brain and brawn. As much as the West needs new markets to sell their goods, India needs new markets to absorb her labour. Excess labour and consequentially, unemployment, is our problem, WTO negotiations have shown how hypocritical western nations are. They squeeze developing countries to drop subsidies and open markets, while they retain their subsidies and close their markets to foreign goods. In no field is this more blatant than agriculture, where western nations continue with huge farm subsidies while at the time same blocking their markets to  agricultural produce from developing countries. The West is almost diabolical in the way they not only exploit the inadequacies of poorer nations, but add a moral halo to boot. They pretend they are being charitable in giving aid when in reality it is often to help Third World nations buy their own products or services. Economists have shown how trade and not aid is what really helps developing countries to prosper. Halving the West's protectionist barriers could boost developing country incomes by $150 billion a year, three times what is currently given in aid.
But one can argue that India invests heavily in training professionals and it is a heavy drain when they leave our shores. This is true but perhaps there is a solution. We have no dearth of students. More top-notch educational institutions could be established with or without foreign investment in smaller towns to ensure growth and spread of ancillary industries. Some of these students may emigrate, but many will remain. Another option is to outsource diagnostic facilities in India, maybe even get foreign institutions to invest in upgrading our government hospitals in a few, select smaller towns (with airports) to avoid overcrowding in metropolitan cities. A certain number of beds in these hospitals could then be reserved for foreign patients. This could be a win-win for them and for us because the upgradation would attract better staff, ease congestion from big cities and provide better medicare to Indians living in the region.
We live in a changing world that constantly throws up new challenges. The clever thing to do is to convert these into opportunities. There is no wisdom in being blindly obstructionist or rapaciously greedy. Coming up with creative solutions is what we need most. We shouldn't be diffident about extracting maximum mileage out of our inherent strengths so that more Indians can benefit, so that the nation as a whole develops in a more even-handed manner than the current lopsided growth concentrated entirely in a few big cities, in a few geographical zones. A creative approach could simultaneously cure many maladies.

In 1998, China’s share in World trade, compared to that of India, was higher by approx

Directions: Read the following passage carefully to answer the given question. 

In 1971, China contributed US \$ 2.78 billion to world trade (exports), which was 0.82 percent of world trade. Since then, its contribution to world trade consistently increased: US \$ 183.59 billion (3.37 percent) in 1998; and US $ 250 billion (over 4 percent) in 2001. India's contribution in 1971 was US $ 2.04 billion (0.60 percent of world trade) and US \$ 33.44 billion in 1998. In 2001, we achieved exports of US \$ 44.5 billion (0.70 percent of world trade). The export figures between India and China showed a big difference in 2001 though it was marginal in 1971.

The key factors influencing world trade are: External trade and foreign investment; relocation of global manufacturing basis; and rapid technological developments. External trade & foreign investment: Capital flows in the form of foreign direct investment (FDI's) and foreign invested enterprises (FIE's). Cross border acquisitions and mergers constituted a major percentage of FDI flows. FDI flow to developing countries increased by six fold from 1990 to 1998. During 1995-98, FDI flow increased to US \$ 1886 billion. Of this, China alone attracted US \$ 164 billion while India's share was only US \$ 11 billion. The impact of FDI to a host country's economy is widely recognised. The foreign-funded firms contributed to nearly 45 per cent of China's export during 1999.

Relocation of global manufacturing basis: Large-scale shift in global manufacturing basis to Asian countries has occurred through the 1990's, with factor costs, especially wages increased in developed countries. The other factor which determined the choice of shifting was the labour laws and work related rules and regulations. China which was associated with rigid labour laws and other economy related rules and regulations came out with a concept of special export zones which are a foreign enclave in the country where no labour laws and other economy related rules are made applicable. In fact, China soon realised that it may not be possible to change labour laws and other economy related rules in the country so soon. However, having realised their importance for attracting FDI and to the growth of their economy, it accepted the idea of creating these foreign enclaves such as Shenzen and attracted foreign capital and technology. That is the reason why approximately 45 per cent of China's exports come from such zones.

Rapid technological developments: Rapid technological developments have led to a steep decline in transportation and telecommunication costs. These in turn have vastly reduced the impact of physical distance for global commerce. Though China had a distinct disadvantage of the lack of knowledge of English, it has come out with Chinese as computer compatible language. It has declared that Chinese will be the world's no.1 computer language soon. The flow of FDI capital has also brought with it the technology from the West including the USA. The cultural ties with Taiwan have helped China to a great extent in achieving access to technology and export.

China has achieved the number one position in world trade in regard to toys and stuffed toys. China captured, in 1999, business to the tune of US \$ 52 billion out of global US \$ 300 billion in textile and clothing. China achieved more than US \$ 20 billion in world trade of US \$ 850 billion in electronics and computers in 1999-2000. China's next target is gem and jewellery which is low cost capital but highly labour oriented industry of approximately US \$ 40 billion. China is equally exploring organic and inorganic chemicals which had a world trade of US \$ 574 billion last year.

Destination wise analysis will show that in the USA's import of top 100 items, China figures among top exporters in respect of 61 items while India appears in only 15 items. Similar is the position in regard to the European Union. In the top 100 items of import by Japan, China appears at 76 items. China has foreign reserves of more than US \$ 250 billion but the share of FDI's in it is a question mark.

Should India be afraid of China or should prepare for competing with China in international trade. This writer is of the opinion that where we cannot compete we should co-operate with China and bring some success to our industry by importing semi finished products both for domestic and international trade. India should learn lesson from the next door neighbour and modify its economic policies, including the Exim policy with the sole motive of converting human factor from liability to an asset.

We can conclude from the passage that

Directions: Read the following passage carefully to answer the given question. 

In 1971, China contributed US \$ 2.78 billion to world trade (exports), which was 0.82 percent of world trade. Since then, its contribution to world trade consistently increased: US \$ 183.59 billion (3.37 percent) in 1998; and US $ 250 billion (over 4 percent) in 2001. India's contribution in 1971 was US $ 2.04 billion (0.60 percent of world trade) and US \$ 33.44 billion in 1998. In 2001, we achieved exports of US \$ 44.5 billion (0.70 percent of world trade). The export figures between India and China showed a big difference in 2001 though it was marginal in 1971.

The key factors influencing world trade are: External trade and foreign investment; relocation of global manufacturing basis; and rapid technological developments. External trade & foreign investment: Capital flows in the form of foreign direct investment (FDI's) and foreign invested enterprises (FIE's). Cross border acquisitions and mergers constituted a major percentage of FDI flows. FDI flow to developing countries increased by six fold from 1990 to 1998. During 1995-98, FDI flow increased to US \$ 1886 billion. Of this, China alone attracted US \$ 164 billion while India's share was only US \$ 11 billion. The impact of FDI to a host country's economy is widely recognised. The foreign-funded firms contributed to nearly 45 per cent of China's export during 1999.

Relocation of global manufacturing basis: Large-scale shift in global manufacturing basis to Asian countries has occurred through the 1990's, with factor costs, especially wages increased in developed countries. The other factor which determined the choice of shifting was the labour laws and work related rules and regulations. China which was associated with rigid labour laws and other economy related rules and regulations came out with a concept of special export zones which are a foreign enclave in the country where no labour laws and other economy related rules are made applicable. In fact, China soon realised that it may not be possible to change labour laws and other economy related rules in the country so soon. However, having realised their importance for attracting FDI and to the growth of their economy, it accepted the idea of creating these foreign enclaves such as Shenzen and attracted foreign capital and technology. That is the reason why approximately 45 per cent of China's exports come from such zones.

Rapid technological developments: Rapid technological developments have led to a steep decline in transportation and telecommunication costs. These in turn have vastly reduced the impact of physical distance for global commerce. Though China had a distinct disadvantage of the lack of knowledge of English, it has come out with Chinese as computer compatible language. It has declared that Chinese will be the world's no.1 computer language soon. The flow of FDI capital has also brought with it the technology from the West including the USA. The cultural ties with Taiwan have helped China to a great extent in achieving access to technology and export.

China has achieved the number one position in world trade in regard to toys and stuffed toys. China captured, in 1999, business to the tune of US \$ 52 billion out of global US \$ 300 billion in textile and clothing. China achieved more than US \$ 20 billion in world trade of US \$ 850 billion in electronics and computers in 1999-2000. China's next target is gem and jewellery which is low cost capital but highly labour oriented industry of approximately US \$ 40 billion. China is equally exploring organic and inorganic chemicals which had a world trade of US \$ 574 billion last year.

Destination wise analysis will show that in the USA's import of top 100 items, China figures among top exporters in respect of 61 items while India appears in only 15 items. Similar is the position in regard to the European Union. In the top 100 items of import by Japan, China appears at 76 items. China has foreign reserves of more than US \$ 250 billion but the share of FDI's in it is a question mark.

Should India be afraid of China or should prepare for competing with China in international trade. This writer is of the opinion that where we cannot compete we should co-operate with China and bring some success to our industry by importing semi finished products both for domestic and international trade. India should learn lesson from the next door neighbour and modify its economic policies, including the Exim policy with the sole motive of converting human factor from liability to an asset.

“Exim” policy most likely refers to

Directions: Read the following passage carefully to answer the given question. 

In 1971, China contributed US \$ 2.78 billion to world trade (exports), which was 0.82 percent of world trade. Since then, its contribution to world trade consistently increased: US \$ 183.59 billion (3.37 percent) in 1998; and US $ 250 billion (over 4 percent) in 2001. India's contribution in 1971 was US $ 2.04 billion (0.60 percent of world trade) and US \$ 33.44 billion in 1998. In 2001, we achieved exports of US \$ 44.5 billion (0.70 percent of world trade). The export figures between India and China showed a big difference in 2001 though it was marginal in 1971.

The key factors influencing world trade are: External trade and foreign investment; relocation of global manufacturing basis; and rapid technological developments. External trade & foreign investment: Capital flows in the form of foreign direct investment (FDI's) and foreign invested enterprises (FIE's). Cross border acquisitions and mergers constituted a major percentage of FDI flows. FDI flow to developing countries increased by six fold from 1990 to 1998. During 1995-98, FDI flow increased to US \$ 1886 billion. Of this, China alone attracted US \$ 164 billion while India's share was only US \$ 11 billion. The impact of FDI to a host country's economy is widely recognised. The foreign-funded firms contributed to nearly 45 per cent of China's export during 1999.

Relocation of global manufacturing basis: Large-scale shift in global manufacturing basis to Asian countries has occurred through the 1990's, with factor costs, especially wages increased in developed countries. The other factor which determined the choice of shifting was the labour laws and work related rules and regulations. China which was associated with rigid labour laws and other economy related rules and regulations came out with a concept of special export zones which are a foreign enclave in the country where no labour laws and other economy related rules are made applicable. In fact, China soon realised that it may not be possible to change labour laws and other economy related rules in the country so soon. However, having realised their importance for attracting FDI and to the growth of their economy, it accepted the idea of creating these foreign enclaves such as Shenzen and attracted foreign capital and technology. That is the reason why approximately 45 per cent of China's exports come from such zones.

Rapid technological developments: Rapid technological developments have led to a steep decline in transportation and telecommunication costs. These in turn have vastly reduced the impact of physical distance for global commerce. Though China had a distinct disadvantage of the lack of knowledge of English, it has come out with Chinese as computer compatible language. It has declared that Chinese will be the world's no.1 computer language soon. The flow of FDI capital has also brought with it the technology from the West including the USA. The cultural ties with Taiwan have helped China to a great extent in achieving access to technology and export.

China has achieved the number one position in world trade in regard to toys and stuffed toys. China captured, in 1999, business to the tune of US \$ 52 billion out of global US \$ 300 billion in textile and clothing. China achieved more than US \$ 20 billion in world trade of US \$ 850 billion in electronics and computers in 1999-2000. China's next target is gem and jewellery which is low cost capital but highly labour oriented industry of approximately US \$ 40 billion. China is equally exploring organic and inorganic chemicals which had a world trade of US \$ 574 billion last year.

Destination wise analysis will show that in the USA's import of top 100 items, China figures among top exporters in respect of 61 items while India appears in only 15 items. Similar is the position in regard to the European Union. In the top 100 items of import by Japan, China appears at 76 items. China has foreign reserves of more than US \$ 250 billion but the share of FDI's in it is a question mark.

Should India be afraid of China or should prepare for competing with China in international trade. This writer is of the opinion that where we cannot compete we should co-operate with China and bring some success to our industry by importing semi finished products both for domestic and international trade. India should learn lesson from the next door neighbour and modify its economic policies, including the Exim policy with the sole motive of converting human factor from liability to an asset.

FDI, as per the passage includes

Directions: Read the following passage carefully to answer the given question. 

In 1971, China contributed US \$ 2.78 billion to world trade (exports), which was 0.82 percent of world trade. Since then, its contribution to world trade consistently increased: US \$ 183.59 billion (3.37 percent) in 1998; and US $ 250 billion (over 4 percent) in 2001. India's contribution in 1971 was US $ 2.04 billion (0.60 percent of world trade) and US \$ 33.44 billion in 1998. In 2001, we achieved exports of US \$ 44.5 billion (0.70 percent of world trade). The export figures between India and China showed a big difference in 2001 though it was marginal in 1971.

The key factors influencing world trade are: External trade and foreign investment; relocation of global manufacturing basis; and rapid technological developments. External trade & foreign investment: Capital flows in the form of foreign direct investment (FDI's) and foreign invested enterprises (FIE's). Cross border acquisitions and mergers constituted a major percentage of FDI flows. FDI flow to developing countries increased by six fold from 1990 to 1998. During 1995-98, FDI flow increased to US \$ 1886 billion. Of this, China alone attracted US \$ 164 billion while India's share was only US \$ 11 billion. The impact of FDI to a host country's economy is widely recognised. The foreign-funded firms contributed to nearly 45 per cent of China's export during 1999.

Relocation of global manufacturing basis: Large-scale shift in global manufacturing basis to Asian countries has occurred through the 1990's, with factor costs, especially wages increased in developed countries. The other factor which determined the choice of shifting was the labour laws and work related rules and regulations. China which was associated with rigid labour laws and other economy related rules and regulations came out with a concept of special export zones which are a foreign enclave in the country where no labour laws and other economy related rules are made applicable. In fact, China soon realised that it may not be possible to change labour laws and other economy related rules in the country so soon. However, having realised their importance for attracting FDI and to the growth of their economy, it accepted the idea of creating these foreign enclaves such as Shenzen and attracted foreign capital and technology. That is the reason why approximately 45 per cent of China's exports come from such zones.

Rapid technological developments: Rapid technological developments have led to a steep decline in transportation and telecommunication costs. These in turn have vastly reduced the impact of physical distance for global commerce. Though China had a distinct disadvantage of the lack of knowledge of English, it has come out with Chinese as computer compatible language. It has declared that Chinese will be the world's no.1 computer language soon. The flow of FDI capital has also brought with it the technology from the West including the USA. The cultural ties with Taiwan have helped China to a great extent in achieving access to technology and export.

China has achieved the number one position in world trade in regard to toys and stuffed toys. China captured, in 1999, business to the tune of US \$ 52 billion out of global US \$ 300 billion in textile and clothing. China achieved more than US \$ 20 billion in world trade of US \$ 850 billion in electronics and computers in 1999-2000. China's next target is gem and jewellery which is low cost capital but highly labour oriented industry of approximately US \$ 40 billion. China is equally exploring organic and inorganic chemicals which had a world trade of US \$ 574 billion last year.

Destination wise analysis will show that in the USA's import of top 100 items, China figures among top exporters in respect of 61 items while India appears in only 15 items. Similar is the position in regard to the European Union. In the top 100 items of import by Japan, China appears at 76 items. China has foreign reserves of more than US \$ 250 billion but the share of FDI's in it is a question mark.

Should India be afraid of China or should prepare for competing with China in international trade. This writer is of the opinion that where we cannot compete we should co-operate with China and bring some success to our industry by importing semi finished products both for domestic and international trade. India should learn lesson from the next door neighbour and modify its economic policies, including the Exim policy with the sole motive of converting human factor from liability to an asset.

Choose the word most similar in meaning to the word ‘acquisitions’, as used in the passage.

Directions: Read the following passage carefully to answer the given question. 

In 1971, China contributed US \$ 2.78 billion to world trade (exports), which was 0.82 percent of world trade. Since then, its contribution to world trade consistently increased: US \$ 183.59 billion (3.37 percent) in 1998; and US $ 250 billion (over 4 percent) in 2001. India's contribution in 1971 was US $ 2.04 billion (0.60 percent of world trade) and US \$ 33.44 billion in 1998. In 2001, we achieved exports of US \$ 44.5 billion (0.70 percent of world trade). The export figures between India and China showed a big difference in 2001 though it was marginal in 1971.

The key factors influencing world trade are: External trade and foreign investment; relocation of global manufacturing basis; and rapid technological developments. External trade & foreign investment: Capital flows in the form of foreign direct investment (FDI's) and foreign invested enterprises (FIE's). Cross border acquisitions and mergers constituted a major percentage of FDI flows. FDI flow to developing countries increased by six fold from 1990 to 1998. During 1995-98, FDI flow increased to US \$ 1886 billion. Of this, China alone attracted US \$ 164 billion while India's share was only US \$ 11 billion. The impact of FDI to a host country's economy is widely recognised. The foreign-funded firms contributed to nearly 45 per cent of China's export during 1999.

Relocation of global manufacturing basis: Large-scale shift in global manufacturing basis to Asian countries has occurred through the 1990's, with factor costs, especially wages increased in developed countries. The other factor which determined the choice of shifting was the labour laws and work related rules and regulations. China which was associated with rigid labour laws and other economy related rules and regulations came out with a concept of special export zones which are a foreign enclave in the country where no labour laws and other economy related rules are made applicable. In fact, China soon realised that it may not be possible to change labour laws and other economy related rules in the country so soon. However, having realised their importance for attracting FDI and to the growth of their economy, it accepted the idea of creating these foreign enclaves such as Shenzen and attracted foreign capital and technology. That is the reason why approximately 45 per cent of China's exports come from such zones.

Rapid technological developments: Rapid technological developments have led to a steep decline in transportation and telecommunication costs. These in turn have vastly reduced the impact of physical distance for global commerce. Though China had a distinct disadvantage of the lack of knowledge of English, it has come out with Chinese as computer compatible language. It has declared that Chinese will be the world's no.1 computer language soon. The flow of FDI capital has also brought with it the technology from the West including the USA. The cultural ties with Taiwan have helped China to a great extent in achieving access to technology and export.

China has achieved the number one position in world trade in regard to toys and stuffed toys. China captured, in 1999, business to the tune of US \$ 52 billion out of global US \$ 300 billion in textile and clothing. China achieved more than US \$ 20 billion in world trade of US \$ 850 billion in electronics and computers in 1999-2000. China's next target is gem and jewellery which is low cost capital but highly labour oriented industry of approximately US \$ 40 billion. China is equally exploring organic and inorganic chemicals which had a world trade of US \$ 574 billion last year.

Destination wise analysis will show that in the USA's import of top 100 items, China figures among top exporters in respect of 61 items while India appears in only 15 items. Similar is the position in regard to the European Union. In the top 100 items of import by Japan, China appears at 76 items. China has foreign reserves of more than US \$ 250 billion but the share of FDI's in it is a question mark.

Should India be afraid of China or should prepare for competing with China in international trade. This writer is of the opinion that where we cannot compete we should co-operate with China and bring some success to our industry by importing semi finished products both for domestic and international trade. India should learn lesson from the next door neighbour and modify its economic policies, including the Exim policy with the sole motive of converting human factor from liability to an asset.

In 1999, China’s share in the World market in textile and clothing was

Directions: Read the following passage carefully to answer the given question. 

In 1971, China contributed US \$ 2.78 billion to world trade (exports), which was 0.82 percent of world trade. Since then, its contribution to world trade consistently increased: US \$ 183.59 billion (3.37 percent) in 1998; and US $ 250 billion (over 4 percent) in 2001. India's contribution in 1971 was US $ 2.04 billion (0.60 percent of world trade) and US \$ 33.44 billion in 1998. In 2001, we achieved exports of US \$ 44.5 billion (0.70 percent of world trade). The export figures between India and China showed a big difference in 2001 though it was marginal in 1971.

The key factors influencing world trade are: External trade and foreign investment; relocation of global manufacturing basis; and rapid technological developments. External trade & foreign investment: Capital flows in the form of foreign direct investment (FDI's) and foreign invested enterprises (FIE's). Cross border acquisitions and mergers constituted a major percentage of FDI flows. FDI flow to developing countries increased by six fold from 1990 to 1998. During 1995-98, FDI flow increased to US \$ 1886 billion. Of this, China alone attracted US \$ 164 billion while India's share was only US \$ 11 billion. The impact of FDI to a host country's economy is widely recognised. The foreign-funded firms contributed to nearly 45 per cent of China's export during 1999.

Relocation of global manufacturing basis: Large-scale shift in global manufacturing basis to Asian countries has occurred through the 1990's, with factor costs, especially wages increased in developed countries. The other factor which determined the choice of shifting was the labour laws and work related rules and regulations. China which was associated with rigid labour laws and other economy related rules and regulations came out with a concept of special export zones which are a foreign enclave in the country where no labour laws and other economy related rules are made applicable. In fact, China soon realised that it may not be possible to change labour laws and other economy related rules in the country so soon. However, having realised their importance for attracting FDI and to the growth of their economy, it accepted the idea of creating these foreign enclaves such as Shenzen and attracted foreign capital and technology. That is the reason why approximately 45 per cent of China's exports come from such zones.

Rapid technological developments: Rapid technological developments have led to a steep decline in transportation and telecommunication costs. These in turn have vastly reduced the impact of physical distance for global commerce. Though China had a distinct disadvantage of the lack of knowledge of English, it has come out with Chinese as computer compatible language. It has declared that Chinese will be the world's no.1 computer language soon. The flow of FDI capital has also brought with it the technology from the West including the USA. The cultural ties with Taiwan have helped China to a great extent in achieving access to technology and export.

China has achieved the number one position in world trade in regard to toys and stuffed toys. China captured, in 1999, business to the tune of US \$ 52 billion out of global US \$ 300 billion in textile and clothing. China achieved more than US \$ 20 billion in world trade of US \$ 850 billion in electronics and computers in 1999-2000. China's next target is gem and jewellery which is low cost capital but highly labour oriented industry of approximately US \$ 40 billion. China is equally exploring organic and inorganic chemicals which had a world trade of US \$ 574 billion last year.

Destination wise analysis will show that in the USA's import of top 100 items, China figures among top exporters in respect of 61 items while India appears in only 15 items. Similar is the position in regard to the European Union. In the top 100 items of import by Japan, China appears at 76 items. China has foreign reserves of more than US \$ 250 billion but the share of FDI's in it is a question mark.

Should India be afraid of China or should prepare for competing with China in international trade. This writer is of the opinion that where we cannot compete we should co-operate with China and bring some success to our industry by importing semi finished products both for domestic and international trade. India should learn lesson from the next door neighbour and modify its economic policies, including the Exim policy with the sole motive of converting human factor from liability to an asset.

China circumvented its labour laws through

Directions: Read the following passage carefully to answer the given question. 

In 1971, China contributed US \$ 2.78 billion to world trade (exports), which was 0.82 percent of world trade. Since then, its contribution to world trade consistently increased: US \$ 183.59 billion (3.37 percent) in 1998; and US $ 250 billion (over 4 percent) in 2001. India's contribution in 1971 was US $ 2.04 billion (0.60 percent of world trade) and US \$ 33.44 billion in 1998. In 2001, we achieved exports of US \$ 44.5 billion (0.70 percent of world trade). The export figures between India and China showed a big difference in 2001 though it was marginal in 1971.

The key factors influencing world trade are: External trade and foreign investment; relocation of global manufacturing basis; and rapid technological developments. External trade & foreign investment: Capital flows in the form of foreign direct investment (FDI's) and foreign invested enterprises (FIE's). Cross border acquisitions and mergers constituted a major percentage of FDI flows. FDI flow to developing countries increased by six fold from 1990 to 1998. During 1995-98, FDI flow increased to US \$ 1886 billion. Of this, China alone attracted US \$ 164 billion while India's share was only US \$ 11 billion. The impact of FDI to a host country's economy is widely recognised. The foreign-funded firms contributed to nearly 45 per cent of China's export during 1999.

Relocation of global manufacturing basis: Large-scale shift in global manufacturing basis to Asian countries has occurred through the 1990's, with factor costs, especially wages increased in developed countries. The other factor which determined the choice of shifting was the labour laws and work related rules and regulations. China which was associated with rigid labour laws and other economy related rules and regulations came out with a concept of special export zones which are a foreign enclave in the country where no labour laws and other economy related rules are made applicable. In fact, China soon realised that it may not be possible to change labour laws and other economy related rules in the country so soon. However, having realised their importance for attracting FDI and to the growth of their economy, it accepted the idea of creating these foreign enclaves such as Shenzen and attracted foreign capital and technology. That is the reason why approximately 45 per cent of China's exports come from such zones.

Rapid technological developments: Rapid technological developments have led to a steep decline in transportation and telecommunication costs. These in turn have vastly reduced the impact of physical distance for global commerce. Though China had a distinct disadvantage of the lack of knowledge of English, it has come out with Chinese as computer compatible language. It has declared that Chinese will be the world's no.1 computer language soon. The flow of FDI capital has also brought with it the technology from the West including the USA. The cultural ties with Taiwan have helped China to a great extent in achieving access to technology and export.

China has achieved the number one position in world trade in regard to toys and stuffed toys. China captured, in 1999, business to the tune of US \$ 52 billion out of global US \$ 300 billion in textile and clothing. China achieved more than US \$ 20 billion in world trade of US \$ 850 billion in electronics and computers in 1999-2000. China's next target is gem and jewellery which is low cost capital but highly labour oriented industry of approximately US \$ 40 billion. China is equally exploring organic and inorganic chemicals which had a world trade of US \$ 574 billion last year.

Destination wise analysis will show that in the USA's import of top 100 items, China figures among top exporters in respect of 61 items while India appears in only 15 items. Similar is the position in regard to the European Union. In the top 100 items of import by Japan, China appears at 76 items. China has foreign reserves of more than US \$ 250 billion but the share of FDI's in it is a question mark.

Should India be afraid of China or should prepare for competing with China in international trade. This writer is of the opinion that where we cannot compete we should co-operate with China and bring some success to our industry by importing semi finished products both for domestic and international trade. India should learn lesson from the next door neighbour and modify its economic policies, including the Exim policy with the sole motive of converting human factor from liability to an asset.

One of the reasons for rapid technological development of China was

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In 1971, China contributed US \$ 2.78 billion to world trade (exports), which was 0.82 percent of world trade. Since then, its contribution to world trade consistently increased: US \$ 183.59 billion (3.37 percent) in 1998; and US $ 250 billion (over 4 percent) in 2001. India's contribution in 1971 was US $ 2.04 billion (0.60 percent of world trade) and US \$ 33.44 billion in 1998. In 2001, we achieved exports of US \$ 44.5 billion (0.70 percent of world trade). The export figures between India and China showed a big difference in 2001 though it was marginal in 1971.

The key factors influencing world trade are: External trade and foreign investment; relocation of global manufacturing basis; and rapid technological developments. External trade & foreign investment: Capital flows in the form of foreign direct investment (FDI's) and foreign invested enterprises (FIE's). Cross border acquisitions and mergers constituted a major percentage of FDI flows. FDI flow to developing countries increased by six fold from 1990 to 1998. During 1995-98, FDI flow increased to US \$ 1886 billion. Of this, China alone attracted US \$ 164 billion while India's share was only US \$ 11 billion. The impact of FDI to a host country's economy is widely recognised. The foreign-funded firms contributed to nearly 45 per cent of China's export during 1999.

Relocation of global manufacturing basis: Large-scale shift in global manufacturing basis to Asian countries has occurred through the 1990's, with factor costs, especially wages increased in developed countries. The other factor which determined the choice of shifting was the labour laws and work related rules and regulations. China which was associated with rigid labour laws and other economy related rules and regulations came out with a concept of special export zones which are a foreign enclave in the country where no labour laws and other economy related rules are made applicable. In fact, China soon realised that it may not be possible to change labour laws and other economy related rules in the country so soon. However, having realised their importance for attracting FDI and to the growth of their economy, it accepted the idea of creating these foreign enclaves such as Shenzen and attracted foreign capital and technology. That is the reason why approximately 45 per cent of China's exports come from such zones.

Rapid technological developments: Rapid technological developments have led to a steep decline in transportation and telecommunication costs. These in turn have vastly reduced the impact of physical distance for global commerce. Though China had a distinct disadvantage of the lack of knowledge of English, it has come out with Chinese as computer compatible language. It has declared that Chinese will be the world's no.1 computer language soon. The flow of FDI capital has also brought with it the technology from the West including the USA. The cultural ties with Taiwan have helped China to a great extent in achieving access to technology and export.

China has achieved the number one position in world trade in regard to toys and stuffed toys. China captured, in 1999, business to the tune of US \$ 52 billion out of global US \$ 300 billion in textile and clothing. China achieved more than US \$ 20 billion in world trade of US \$ 850 billion in electronics and computers in 1999-2000. China's next target is gem and jewellery which is low cost capital but highly labour oriented industry of approximately US \$ 40 billion. China is equally exploring organic and inorganic chemicals which had a world trade of US \$ 574 billion last year.

Destination wise analysis will show that in the USA's import of top 100 items, China figures among top exporters in respect of 61 items while India appears in only 15 items. Similar is the position in regard to the European Union. In the top 100 items of import by Japan, China appears at 76 items. China has foreign reserves of more than US \$ 250 billion but the share of FDI's in it is a question mark.

Should India be afraid of China or should prepare for competing with China in international trade. This writer is of the opinion that where we cannot compete we should co-operate with China and bring some success to our industry by importing semi finished products both for domestic and international trade. India should learn lesson from the next door neighbour and modify its economic policies, including the Exim policy with the sole motive of converting human factor from liability to an asset.