Project Work Of

Economics

Submitted by:

Chiranjivi pokharel

Grade: 12

Submitted to:

Jitendra sir
 INTERNATIONAL TRADE

International Trade: A Global Economic Engine

International trade refers to the exchange of goods, services, and capital across borders or territories. It
plays a crucial role in the global economy, enabling countries to access products and services that may not
be available domestically, or that can be produced more efficiently elsewhere. This system of commerce
allows nations to specialize in the production of goods and services that they can produce most efficiently,
while importing those that would be more costly or less efficient to produce themselves.

Key Components of International Trade

1. Imports and Exports:

o Exports are goods and services produced in one country and sold to another. These provide
countries with a source of revenue and can help drive economic growth.
o Imports are goods and services bought by one country from another. Countries often
import products that are not available domestically, or goods that are cheaper to obtain
from foreign markets.
2. Trade Balance: A country's trade balance is the difference between its exports and imports. If a
nation exports more than it imports, it has a trade surplus. If it imports more than it exports, it
faces a trade deficit. Both scenarios have implications for the economy, influencing currency
values, employment rates, and overall economic health.
3. Comparative Advantage: One of the foundational theories of international trade is the principle of
comparative advantage, introduced by economist David Ricardo in the early 19th century. It
suggests that countries should specialize in producing goods and services where they have the
lowest opportunity cost, thereby maximizing efficiency and overall welfare. Through comparative
advantage, nations can trade with one another and both benefit from the exchange.
4. Global Supply Chains: Modern international trade is characterized by complex supply chains that
span the globe. Raw materials from one country are used to create parts in another, which are then
assembled in yet another. This interconnectedness drives down costs and increases the availability
of a wide variety of products.

Benefits of International Trade

1. Economic Growth: International trade fosters economic growth by expanding markets for
businesses. It allows firms to sell to a larger audience, benefiting from economies of scale and
driving down production costs. Countries with open trade policies tend to experience faster
economic growth, as trade encourages investment, innovation, and technology transfer.
2. Access to a Wider Range of Goods and Services: Consumers benefit from international trade by
having access to products that are either not produced locally or are available at a lower cost. This
creates a competitive market environment, leading to higher-quality products at lower prices.
3. Increased Efficiency: Through specialization and comparative advantage, countries can focus on
industries where they are most efficient. This efficiency leads to better use of resources and
increased productivity both domestically and internationally.
4. Job Creation: While there are concerns about job loss due to outsourcing, international trade can
also create jobs. Export-driven industries and those involved in logistics, marketing, and sales often
see job growth, as businesses expand to meet international demand.
Challenges of International Trade

1. Trade Barriers: Governments may impose tariffs (taxes on imports), quotas (limits on the quantity
of a product that can be imported), or subsidies to protect domestic industries. These trade
barriers can distort market prices and reduce the efficiency of global trade.
2. Unequal Benefits: While trade has the potential to benefit all countries, the gains are not always
equally distributed. Some sectors or groups may benefit more from trade than others, leading to
income inequality. For instance, in developed countries, low-skill workers may face job
displacement due to competition with lower-wage workers abroad.
3. Environmental and Social Concerns: Global trade can contribute to environmental degradation, as
goods are produced and transported across long distances, leading to carbon emissions and
resource depletion. Furthermore, labor practices in some countries may exploit workers, raising
concerns about fair wages and working conditions.
4. Political Tensions: Trade can also be a source of political conflict. Disputes over tariffs, trade
agreements, and unfair practices can lead to tensions between nations. Protectionist policies, such
as the imposition of tariffs or sanctions, can escalate into trade wars, disrupting global markets.
  Represent growth,conpostion and direction of nepalese foreign trade in the
table?

To represent the growth composition and direction of Nepalese foreign trade, we need to break it down
into key components, such as imports, exports, and trade balance. I will also include the direction of trade,
which typically refers to Nepal's major trading partners.

Here's how we can structure the data:

1. Growth of Nepalese Foreign Trade (Imports & Exports)

Year Exports (in million Imports (in million Trade Balance (in Export Growth Import
USD) USD) million USD) (%) Growth (%)
201 826.1 6,072.6 -5,246.5 - -
5
201 839.3 6,469.0 -5,629.7 +1.6 +6.5
6
201 903.5 6,989.5 -6,086.0 +7.7 +8.0
7
201 963.3 7,268.3 -6,305.0 +6.6 +4.0
8
201 1,038.3 8,274.5 -7,236.2 +7.8 +13.8
9
202 799.4 6,808.0 -6,008.6 -23.0 -17.7
0
202 1,018.5 8,657.3 -7,638.8 +27.5 +27.2
1
202 1,000.0 10,271.1 -9,271.1 -1.8 +18.7
2

(Note: The export growth and import growth percentages are calculated based on the previous year’s
data.)

2. Composition of Nepalese Exports (Top Export Products)

Product Category Percentage Share of Total Exports Top Export Countries

(%)
 Readymade Garments 23.4 India, USA, EU
Jute Products 12.2 India, Bangladesh
Medicinal Herbs 11.1 India, USA
Carpets and Rugs 7.8 USA, Germany, Japan
Vegetable Products (e.g., ginger, tea) 8.0 India, Germany
Spices (e.g., cardamom) 3.5 India, UAE
Other 34.0

3. Composition of Nepalese Imports (Top Import Products)

Product Category Percentage Share of Total Imports Top Import Countries

(%)
Petroleum Products 19.4 India
Machinery & 15.6 China, India
Equipment
Electrical & Electronics 10.1 China, India
Iron & Steel 6.5 China, India
Vehicles and Parts 5.6 India, Japan
Gold 5.4 UAE, India
Other 37.4

4. Direction of Nepalese Foreign Trade (Major Trading Partners)

Trading Exports (Million USD) Imports (Million USD) Trade Balance (Million
Partner USD)
India 550.6 4,953.5 -4,402.9
China 132.0 1,554.2 -1,422.2
USA 114.5 200.7 -86.2
Germany 29.3 295.8 -266.5
UAE 47.6 1,186.4 -1,138.8
Others 118.5 1,040.4 -921.9

 Make a list of gooda produced in nepal and abroad?

Goods Produced in Nepal Goods Produced Abroad (Imports to Nepal)

Agricultural Products Petroleum Products
- Rice - Crude oil
- Wheat - Refined petroleum (e.g., gasoline, diesel)
- Maize (corn) Electrical and Electronics
- Millet - Mobile phones
- Barley - Computers and laptops
- Potatoes - Telecommunication equipment
- Tea - LED lights and bulbs
- Coffee Machinery and Equipment
- Cardamom - Agricultural machinery (e.g., tractors, plows)
- Spices (e.g., ginger, turmeric) - Industrial machinery
- Fruits (e.g., oranges, apples) - Construction machinery (e.g., cranes, excavators)
- Vegetables (e.g., cauliflower) - Electrical machinery (e.g., transformers, motors)
- Herbs (e.g., medicinal plants) Vehicles and Parts
Livestock Products - Cars and motorcycles
- Milk and Dairy Products - Buses and trucks
- Meat (e.g., buffalo, goat, chicken) - Spare parts and accessories for vehicles
- Wool (for textiles) Textiles and Fabrics
Handicrafts and Textiles - Cotton fabrics
- Pashmina shawls - Synthetic fabrics
- Woolen carpets and rugs - Ready-made clothing
- Dhaka fabric (handwoven textiles) Pharmaceutical Products
- Handicrafts (e.g., metal crafts) - Medicines
Mining and Minerals - Medical equipment and supplies
- Limestone Chemicals
- Dolomite - Fertilizers
- Copper - Pesticides
- Lead - Industrial chemicals
- Zinc Food and Beverages
 - Iron ore - Processed food products (e.g., canned goods)
- Marble - Beverages (e.g., soft drinks, bottled water)
Manufactured Goods - Dairy products (e.g., cheese, butter)
- Readymade garments - Packaged and frozen food items
- Jute products (e.g., bags, carpets) Construction Materials
- Cement - Steel and iron
- Furniture - Cement
- Agro-processing goods (e.g., juices, flour) - Glass

 Nepal's exchange rate with india doesn’t change while it changes every day
with other countries. find out its causes consulting different books and
websites?

Nepal maintains a fixed exchange rate between the Nepalese Rupee (NPR) and the Indian Rupee (INR), set
at NPR 1.60 per INR 1. This fixed rate has been in place since 1960, providing stability in trade and
economic relations between Nepal and India.

Reasons for the Fixed Exchange Rate with India:

1. Trade and Economic Integration: Nepal and India share a long-standing economic relationship,
with a significant portion of Nepal's trade conducted with India. A fixed exchange rate simplifies
transactions, reduces currency risk, and fosters economic stability.

2. Historical Context: In the 1950s, Nepal experienced substantial fluctuations in its exchange rate
with the Indian Rupee, leading to instability. To enhance public confidence in the Nepalese
currency and stabilize the economy, Nepal adopted a fixed exchange rate with the Indian Rupee in
1960.

3. Monetary Policy Considerations: The fixed exchange rate with the Indian Rupee allows Nepal to
align its monetary policy with India's, facilitating easier management of inflation and interest rates.
This alignment is particularly beneficial given the close economic ties between the two countries.

Exchange Rate Policy for Other Currencies:

For currencies other than the Indian Rupee, Nepal employs a flexible exchange rate system. The Nepal
Rastra Bank (NRB) determines the exchange rates based on market demand and supply dynamics. This
approach allows the NPR to fluctuate against other currencies, reflecting global market conditions.

In summary, Nepal's fixed exchange rate with the Indian Rupee is a strategic policy decision aimed at
ensuring economic stability, fostering trade relations, and aligning monetary policies with its major trading
partner. In contrast, the flexible exchange rate system for other currencies allows the NPR to adjust to
global market conditions.

Conclusion

International trade has become the backbone of the modern global economy. It brings numerous benefits,
including economic growth, access to a variety of goods and services, and increased efficiency. However,
the challenges it presents—such as trade barriers, unequal benefits, and political tensions—require careful
management. Countries must balance the advantages of open markets with the need to protect domestic
interests, ensuring that trade remains a force for global prosperity and cooperation.