The international economic relations between two countries depend on a number of factors like the import export relations, investment between two countries and the like. Trade is an important factor in this context. Normally there are two types of trades - bilateral trade and multilateral trade. Bilateral trade is the trade between two countries and multilateral trade is trade between more than two countries. In the recent times, foreign direct investment relations between two countries have assumed increased importance as well.
The inflow of money in a country from another one goes a long way in determining the relations between those countries in the international scenario. In the modern day economic scenario globalization has played an important role in determining the international economic relationship between two or more countries. Prior to this phenomenon there were several countries that had erected trade barriers in the form of oppressive foreign trade legislations and tax policies that were not exactly in favor of attracting foreign direct investment from other countries.
In the era of globalization there have been major changes in the economic relationships between the various countries of the world. The World Trade Organization has worked in conjunction with the governments of several countries to lift trade barriers and bring about a better economic environment. This has led to the creation of several free trade zones all around the world. As a result of the creation of the free trade zones it has been possible to promote free trade on a global basis.
The importance of good international economic relations may be understood by taking a look at India and China. Apart from being in good terms with other countries these two nations also have cordial economic relationships and they have shared an almost symbiotic relationship from an economic point of view as well. They have continued to make economic progress by helping each other out and have set the trend as far as international economic relations are concerned.
The implementation of the various reform measures has given immense opportunities to the countries of the world to have part in and . The international economic relation section is simply a country's participation in the field of trade and investment with other countries of the world.
India's International Economic Relations
India has important and strong economic relations with many countries in the world. Traditionally India has maintained trade relations with various countries. After the economic reforms of the early nineties, the Indian economy was opened up to further bilateral trade relations with various countries and to Foreign Direct Investment (FDI). Import restrictions on many items were lifted which led to expansion of India's economic relations with other nations.
Some of the countries with which India has strong economic relations are -
- United States of America
- United Kingdom
India's Economic Relations with US
India's economic relations with the United States of America have grown since the economic reforms. India ranks 24th among the trade partners of the US in terms of exports and 18th in terms of imports. The Indo-US Economic Dialogue of 2003 was a major step in strengthening economic relations between India and the United States.
The major export items from India to the United States include -
- Precious stones
- Textile products
- Organic Chemicals
- Iron and steel products
The major import items to India from the United States include -
- Medical and surgical equipments
- Computers and computer parts
- Gas turbines
- Electrical Machinery
- Wooden pulp
India's Economic Relations with UK
India also has strong economic relations with the United Kingdom. India was a British colony for more than 200 years. Economic relations between India and the UK have undergone radical changes since the colonial period. UK ranks fifth among India's trade partners. However before 2002, UK was the second leading trading partner of India. India is one of the leading export markets of the United Kingdom among the developing nations. Significant Foreign Direct Investment (FDI) has taken place in India from the United Kingdom. Major FDI inflows to India from UK have taken place in the following sectors -
- Oil and Gas
- Service industries
The major export items from India to the United Kingdom include -
- Gems and Jewelry
- Leather and leather goods
- Metal products
- Pharmaceutical products
The major import items to India from the United Kingdom include -
- Rough diamond
- Telecom equipment
- Power generating equipment
- Transport equipment
- Industrial machinery
India's Economic Relations with Japan
India's economic relations with Japan dates back to many centuries. The economic relations between the two nations have been traditionally very strong. Japan has provided substantial loans to India in the form of aid and technical co-operation in recent years. Japan is the second largest export destination of India.
The major export items from India to Japan include -
- Marine products
- Cotton yarn
- Iron ore
The major import items to India from japan include -
- Plant related products
- Transport equipment
India's Economic Relations with China
India's buoyant economic relations with China in recent years have been one of the most important economic developments. The major export item from India to China is Iron ore which constitutes 53% of India's exports to China. Machinery is the most important import item to India from China accounting for 36% of aggregate imports.