Subject: Economics
Exchange of goods and services is simply said trade. Such exchange between the people of different countries is called foreign trade. Foreign trade means the exchange of goods and services between two or more countries. Foreign trade creates a specialization in production and provides benefits of specialization. Foreign trade plays important role in the economic development of a country. An important aspect of the foreign trade is an efficient allocation of scarce resources among different countries.
Export and import are the two components of foreign trade. The difference between export and import is called trade balance. If export is greater than import, it is called surplus trade balance. If import exceeds export than it is called deficit trade balance.
Foreign trade of Nepal was confined only to India and Tibet in the past. Nepal's trade with overseas countries started only since 1956 A.D. During fiscal year (FY) 1856/57, Nepal had total exports equivalent to Rs. 95.5 million. Total import was equivalent to Rs. 169.9 million. Therefore, the volume of foreign trade was equivalent to Rs. 265.4 million.
The composition of foreign trade commonly shows what goods and services a country sells to foreign countries and that goods and services does it buy from outside. Table 11.2 shows comparative values of export and import of Nepal by SITC group for the fiscal year 2010/11 and 2011/12.
S.N | SITC Group | FY 2010/11 | 2011/12 | ||
Imports | Exports | Imports | Exports | ||
1. | Food and live animals | 2926.34 | 1453.18 | 4078.34 | 1593.03 |
2. | Tobacco and beverage | 216.71 | 0.17 | 308.19 | 10.18 |
3. | Crude materials and inedible | 1948.02 | 192.33 | 1777.32 | 258.70 |
4. | Minerals, fuels and lubricants | 8123.45 | 0.00 | 10277.10 | 0.00 |
5. | Animals and vegetable, oils and fats | 1473.38 | 40.90 | 1791.84 | 33.17 |
6. | Chemicals and drugs | 4527.21 | 267.95 | 4901.73 | 273.73 |
7. | Classified by materials | 9133.78 | 3349.65 | 11478.6 | 3900.89 |
8. | Machinery and transport equipments | 8533.15 | 37.97 | 8241.36 | 27.75 |
9. | Miscellaneous manufactured articles | 2723.48 | 1091.11 | 3297.22 | 1328.40 |
10. | Not Classified | 12.03 | 0.59 | 13.51 | 0.25 |
Total | 39617.55 | 6433.85 | 46166.77 | 7426.1 |
Table 11.2
India and Tibet are the major traditional trading partners of Nepal. The direction of foreign trade means the countries to which a country exports its goods and the countries from which it imports. Thus direction consists of a destination of one country's exports and sources of the country's imports. The Direction of Foreign Trade of Nepal can be presented by the following table:
Direction | Export | Import | ||
2010/11 | 2011/12 | 2010/11 | 2011/12 | |
India | 66.9 | 67.1 | 67.5 | 64.8 |
Rest of the world | 33.1 | 32.9 | 32.5 | 35.2 |
The problem of foreign trade in Nepal are as follows:
Reference:
Adhikari, Ramesh Prasad, Economics-XI, Asmita Pustak Prakashan, Kathmandu
Kanel, Navaraj et.al., Principles of Economics-XI, Buddha Prakashan, Kathmandu
Kharel, Khom Raj et.al., Economics In English Medium-XI, Sukunda Pustak Bhawan, Kathmandu
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