OPEN ECONOMY (Point 4)

Export and Import of Goods

Import of goods refers to bringing in goods produced in another country to one’s own country.
Similarly, exports are goods produced in one country and sold to buyers in another. Both
exports and imports are components of international trade.

Import of Goods
The import of goods in case of India has largely increased since 2004. As of the latest data
available from 2019, the value has increased more than 4-fold within the last 15 years. Imports
in India peaked in 2018 but after the introduction of the “Make in India” initiative, the imports
reduced comparatively. Whereas in case of Brazil the, even though the numbers have improved
compared to the year 2004 but there hasn’t been a major incline. As of 2019 it has also had a 3-
fold increase since 2004. It had reached a peak in 2013 but has been fluctuating since then.

Export of Goods
Exports in India have faced some sharp changes in the past 15 years. The export values have
also increased more than 4-fold in India since 2004. Exports peaked in the year 2018 and faced
a slight decline in 2019. Similarly, in case of Brazil, the exports have faced sharp fluctuations in
the past 15 years. Exports have increased more than 2-fold in case of Brazil. Around the year
2008, exports for both India and Brazil were almost identical, then India saw an incline greater
than that of Brazil. In 2015, both countries saw a major fall in the export values owing to the
weak economy and appreciation of the dollar.

Service Export
Service Exporter is an exporter who exports the services where we can't see the
product physically, i.e., intangible products. We can explain service export simply as,
any service provided by a person in one nation to people or companies from another.
Service exports are an important emerging trend in global trade.

Interpretation
The YoY for India has been increasing ever since 2004, it has increased three folds whereas if
we look it for Brazil it has been more or less the same. This shows the increased efforts of India
to increase their export whereas Brazil hasn’t paid that much attention towards their slow-
paced increase in export services.
Imports of services
Import of services is an import of service bought in one country that was produced in
another. Imports and exports are the components of international trade. If the value of
a country's imports exceeds the value of its exports, the country has a negative balance
of trade (BOT), also known as a trade deficit.

Interpretation
As we can see from the graph present below, India has been on a rise in imports with
acceptance towards free trade, but with recent focus on ‘Make in India’ initiative there has
been a decline in imports of services in recent years and an increase in exports. While we see
for Brazil, it has been almost the same as for previous years.
Trade as a percentage of GDP
The trade-to-GDP ratio is an indicator of the relative importance of international trade in the
economy of a country. It is calculated by dividing the aggregate value of imports and exports
over a period by the gross domestic product for the same period.
International trade in goods and services illustrates countries’ integration into the world
economy. In relation to their gross domestic product (GDP), small countries are generally more
integrated. They tend to specialize in a limited number of sectors and, to satisfy domestic
demand, they need to import and export more goods and services than larger countries. Size
alone, however, does not determine the level of trade integration.

Interpretation
For India, Trade (% of GDP) increased from 37% to 53% in 4 years from 2004 to 2008. In the
following years it remained in between the mid 40s and mid 50s range.
On the other hand for Brazil, Trade (% of GDP) is lower as compared to India and usually is in
between 20-30% range.
Trading Partners:
Trading partner is that country which buys goods from and sells their goods to India. In short,
any country that does trade with India is its trading partner.

India:
About three-fifths (60.1%) of Indian exports in 2019 were delivered to the top 15 trade
partners, mentioned in the Excel file. USA remained India's top trading partner. This indicates
increasing economic ties between the two countries. In FY2018-19, the bilateral trade between
the USA and India $87.96 billion. Saudi Arabia increased its import purchases from India from
2018 to 2019 by the most at 10%.
Leading the decliners were importers in Vietnam due to a -18.2% reduction year over year.
Among India’s trading partners that generate the greatest positive trade balances, Indian
surpluses with Spain (up 10.7%), Israel (up 9.1%) and United States (up 2.8%) grew at the
fastest pace from 2018 to 2019.
These positive cashflow streams clearly indicate India’s competitive advantages with the above
countries, but also represent key opportunities for India to develop country-specific strategies
to optimize its overall position in international trade.

Brazil:

Overall, Brazil achieved a $46.7 billion trade surplus during 2019 down by -20.5% from its $58.7
billion positive trade balance one year earlier. Over two-thirds (69.5%) of Brazilian exports in
2019 were delivered to the top 15 trade partners. Year over year, 4 among the largest
importers increased their purchases of exports from Brazil namely Japan (up 24.8%), Colombia
(up 10.2%), Mexico (up 7.8%), and the United States (up 2%). Leading the declining import
purchases from Brazil were Argentina (down -35%), Netherlands (down -22.8%), Spain (down
-22.4%) then Chile (down -19.5%). Among Brazil’s trading partners that generate the greatest
positive trade balances, Brazilian grew its surpluses from 2018 to 2019 at the expense of
Colombia (up 51.2%) and the United Arab Emirates (up 12.6%).