INTERNATIONAL

ECONOMICS
Catering to the needs of
lHonours & Post-graduate Students of various Universities
l Students appearing in various Competitive Examinations

K.C. Rana K.N. Verma

Ex-Head P.G. Deptt. of Economics Ex-Head P.G. Deptt. of Economics
D. A. V. College. D. A. V. College.
Amritsar (Pb.) Amritsar (Pb.)

[ Hindi Edition of this book is also available ]

VISHAL PUBLISHING CO.

Future for WINNERS
JALANDHAR — DELHI
 CONTENTS
1. INTRODUCTION TO INTERNATIONAL ECONOMICS 1—13
Economics and International Economics; Contents of International Economics; Inter-regional and
International Trade; Need for a Separate Theory of International Trade; Distinguishing Features
of International Trade; Importance of International Trade; Arguments Against International Trade;
Questions.
2. THE CLASSICAL COMPARATIVE COSTS THEORY 14—27
Adam Smith and the Theory of Absolute Cost Advantage; David Ricardo’s Theory of Comparative
Cost Advantage; Critical Evaluation of Comparative Costs Theory; Empirical Evaluation of
Comparative Costs Theory; Classical Theory of International Trade and Less Developed Countries;
Trade Theory applicable to Less Developed Countries—(i) Productivity Doctrine, (ii) The Vent
for Surplus Theory, Appropriateness of Vent for Surplus Theory; Questions.
3. REFINEMENTS OF CLASSICAL COMPARATIVE COSTS THEORY 28—41
Comparative Costs Thoery Expressed in Money Terms—Taussig’s Contribution; Taussig’s Refinement
Related to Non-Competing Groups; Taussig’s Refinement Related to Charges on Capital; Comparative
Costs Theory applied to more than Two Commodities; Comparative Costs Theory Applied to more
than Two Countries; Multi-commodity and Multi-country Trade Model; Transport Costs and the
Theory of Comparative Costs, Decreasing Costs and the Theory of Comparative Costs; Questions.
4. INTERNATIONAL TRADE EQUILIBRIUM 42—56
The Production Possibility Curve or Opportunity Cost Curve; The Community Indifference Curve;
The Trade Indifference Curve; The Offer Curve, Elasticity of Offer Curve; Trade Equilibrium in
Terms of Community Indifference Curves; Two-Country Trade Equilibrium under Different Cost
Conditions—Trade Equilibrium under Constant Costs, Trade Equilibrium under Increasing Costs,
Trade Equilibrium under Decreasing Costs; Trade Equilibrium in Terms of Trade Indifference Curves;
Trade Equilibrium in Terms of Offer Curves; General Equilibrium of Production, Consumption and
Trade; Multiple Equilibria and Stability; Questions.
5. THE THEORY OF RECIPROCAL DEMAND 57—63
J.S. Mill’s Restatement of Comparative Costs Theory; Theory of Reciprocal Demand; Criticism of
the Theory of Reciprocal Demand; Questions.
6. THE OPPORTUNITY COST THEORY 64—71
Haberler’s Opportunity Cost Theory; Constant Opportunity Cost and International Trade; Increasing
Opportunity Cost and International Trade; Decreasing Opportunity Cost and International Trade;
Increasing and Decreasing Opportunity Cost and International Trade; Evaluation of the Opportunity
Cost Theory; Questions.
7. THE HECKSCHER-OHLIN THEORY 72—80
Heckscher-Ohlin Theory of International Trade—Assumptions of the Heckscher-Ohlin Theory, Factor
Endowments—(i) Physical Criterion, (ii) Price Criterion, Factor Intensities; Superiority of Heckscher-
Ohlin Theory over the Classical Theory; Criticism of Heckscher-Ohlin Theory; Questions.
8. EXTENSIONS OF HECKSCHER-OHLIN THEORY 81—104
Empirical Testing of Heckscher-Ohlin Theory; The Leontief Paradox—Leontief Paradox and Evidence
Related to other Countries, Reconciliation between Leontief Paradox and Heckscher-Ohlin Theory;
Criticism of Leontief Paradox; Factor-Intensity Reversal; Factor Price Equalisation Theory—
Samuelson’s Analysis of Factor Price Equalisation Theorem, Hicksian Analysis of Factor Price
Equalisation Theorem, Lerner’s Analysis of Factor Price Equalisation Theorem, Kindelberger’s
Analysis of Factor Price Equalisation Theorem, Sodersten’s Analysis of Factor Price Equalisation
Theorem, Obstacles to Equalisation of Factor Prices; The Stopler-Samuelson Theorem; The
Rybczynski Theorem; Questions.
9. COMPLEMENTARY TRADE THEORIES 105—122
Economies of Scale and Trade; Differentiated Products and Trade; Differences in Tastes and Trade;
The Specific Factors Model—(a) Single Specific Factor Case, Changes in Factor Endowments,
Effect of Price Changes, (b) Two Specific Factor Case; Technological Gap and Product Cycle Models
and Trade—(i) Technological Gap or Imitation Gap Model, (ii) Product Cycle Model; Research
and Development Expenditure and Trade; Linder’s Theory of Demand and Trade Pattern; The
Kravis Theory of Trade; Keesing’s Theory of Trade; Emmanuel’s Theory of Unequal Exchange;
Questions.
10. INTRA-INDUSTRY TRADE 123—136
Meaning of Intra-Industry Trade; Neo-Heckscher-Ohlin Model; Neo-Chamberlinian Models; Neo-
Hotelling Models; Oligopolistic Models—(i) The Brander-Krugman Model, (ii) The Reciprocal
Dumping Model; Empirical Work on Intra-Industry Trade; Questions.
11. ECONOMIC GROWTH AND INTERNATIONAL TRADE 137—156
Trade and Economic Growth in the 20th Century; Export Pessimism; Nurkse's Version of Export
Pessimism; Empirical Testing of Export Pessimism; Effects of Growth on Trade—Production Effects
of Growth, Consumption Effects of Growth, Combined Production and Consimption Effects of
Growth; Growth and Terms of Trade; Growth and Trade in a Large Country; Growth and Trade in
a Small Country; Immiserising Growth; Effects of Technical Progress on International Trade—(a)
Neutral Technical Progress and Trade, (b) Labour-Saving Technical Progress and Trade, (c) Capital-
saving Technical Progress and Trade; Trade—An Engine of Growth ? Growth-stimulating Effects
of Trade, Adverse Effects of Trade on Growth; Questions.
12. TERMS OF TRADE 157—176
Concepts of Terms of Trade; Net Barter Terms of Trade or Commodity Terms of Trade; Gross
Barter Terms of Trade; Income Terms of Trade; Single Factoral Terms of Trade; Double Factoral
Terms of Trade; Real Cost Terms of Trade; Utility Terms of Trade; Factors Affecting Terms of
Trade—(i) Reciprocal Demand, (ii) Tariff, (iii) Changes in Tastes, (iv) Changes in Factor Endowments,
(v) Changes in Technology, (vi) Economic Growth, (vii) Devaluation, (viii) Balance of Payments
Position, (ix) International Capital Flows, (x) Import Substitutes; Secular Deterioration of Terms
of Trade—Prebisch-Singer Thesis, Reasons for Secular Deterioration of Terms of Trade, Criticism
of Prebisch-Singer Thesis; Impact of Deterioration of Terms of Trade on Developing Countries;
Questions.
13. GAINS FROM TRADE 177—186
Meaning and Measurement of Gains from Trade—(i) Adam Smith’s Approach, (ii) Ricardo-Malthus
Approach, (iii) J.S. Mill’s Approach, (iv) Taussig’s Approach, (v) Modern Approach; Factors
 Determining the Gains from Trade; Gain from Trade for Large and Small Countries; Potential and
Actual Gain from Trade; Free Trade vs. No Trade; Restricted Trade vs. No Trade; Large Country
and Restricted Trade; Static and Dynamic Gains from Trade; Questions.
14. FREE TRADE AND PROTECTION 187—203
Meaning of Free Trade; Arguments for Free Trade; Arguments Against Free Trade; Meaning of
Protection; Arguments for Protection—(i) Economic Arguments, (ii) Non-Economic Arguments;
Protection and Less Developed Countries; Questions.
15. BARRIERS TO TRADE—TARIFFS 204—231
Meaning and Types of Tariffs; Effects of Tariffs under Partial Equilibrium; Effects of Tariffs under
General Equilibrium—(i) General Equilibrium Analysis of Tariffs in a Small Country; (ii) General
Equilibrium Analysis of Tariffs in a Large Country; Terms of Trade Effect of Tariffs—(i) Terms of
Trade Effect in the Absence of Retaliation, (ii) Terms of Trade Effect in the Event of Foreign
Retaliation; Tariffs and Factor Endowments; The Theory of Optimum Tariffs—Optimum Tariffs
with Retaliation, The Optimum Tariff Formula; Tariff and Income Distribution—Stopler-Samuelson
Theorem Again; The Metzler Paradox; The Lerner Symmetry Theorem; Effects of Tariffs on Real
Rewards to Factors of Production—Short Term Effect, Medium Term Effect, Long Term Effect;
Effective Rate of Protection—Assumptions, Importance, Limitations; Questions.
16. BARRIERS TO TRADE—NON-TARIFF 232—248
Import Quotas; Types of Import Quotas; Effects of Import Quotas; The Equivalence of Tariffs
and Quotas; Import Quota Versus Import Tariffs; Tariff-Quota Controversy and Less Developed
Countries; Other Non-Tariff Barriers to Trade—(i) Voluntary Export Restraints (VER), (ii) Technical,
Administrative and Other Regulations, (iii) Trade Restrictions due to International Cartels,
(iv) Export Subsidies, (v) Dumping; Trade Barriers and Non-traded Goods; Questions.
17. POLITICAL ECONOMY OF PROTECTION 249—255
Meaning of Political Market; Concept of Median Voter; Lobbying; The Choice of Protective
Instruments; Anti-Dumping Legislation; Rent-Seeking; Empirical Work on the Political Economy
of Protection; Questions.
18. ECONOMIC INTEGRATION—THEORY OF CUSTOMS UNION 256—290
Meaning of Economic Integration, Benefits of Economic Integration; Forms of Economic Integration;
Problems Involved in the Formation of Customs Union; The Theory of Customs Union—Partial
Equilibrium Analysis of Customs Union—(a) Trade Creation, (b) Trade Diversion; Factors Affecting
Net Welfare; General Equilibrium Approach to Customs Union—(A) The Lipsey Model of Customs
Union, (B) The Vanek Model of Customs Union; Dynamic Effects of Customs Union; Theory of
Customs Union as the Theory of Second Best; Intra-Industry Trade and Customs Union; European
Union (EU) or European Economic Community (EEC)—Objectives, Organisation, Achievements
of EU, The Euro, EU and Developing Countries, India and the EU, Critical Appraisal; Eurozone
Debt Crisis; Integration Among the Less Developed Countries—ASEAN; Problems in the Integration
Among the Less Developed Countries; South Asian Association of Regional Co-operation (SAARC)—
Objectives, Principles, Organisation of SAARC, South Asian Preferential Trading Arrangement
(SAPTA)—Features of SAPTA; Appraisal of the SAARC—Achievements of SAARC, Problems
faced by SAARC; South Asian Free Trade Area (SAFTA); Questions.
19. FOREIGN TRADE AND NATIONAL INCOME 291—298
Foreign Trade Multiplier or Export Multiplier; Foreign Trade Repurcussion Effect— (i) Repurcussion
Effect of Increase in Investment, (ii) Repurcussion Effect of Increase in Exports; Deficiencies in
Foreign Trade Multiplier; Questions.
20. BALANCE OF PAYMENTS—CONCEPTS 299—309
Meaning of Balance of Payments; Structure of Balance of Payments Accounts—(i) The Current
Account, (ii) The Capital Account, (iii) The Account of Financing of Surplus or Deficit; Balance
of Trade and Balance of Payments; Is Balance of Payments Always in Balance ? Equilibrium or
Disequilibrium of the Balance of Payments; Autonomous and Accommodation Transactions; Questions.
21. BALANCE OF PAYMENTS—ADJUSTMENT MECHANISMS 310—331
Balance of Payments Adjustment Through Variations in Exchange Rates; Devaluation and Balance
of Payments Adjustment; The Elasticity Approach; Marshall-Lerner Conditions; Criticism of Elasticity
Approach; The J-Curve Effect; The Absorption Approach; Domestic Price Changes and Balance
of Payments Adjustment; Changes in Income and Balance of Payments Adjustment; Balance of
Payments Adjustment Through Capital Movements; Balance of Payments Adjustment Through
Expenditure Policies: (a) Expenditure Reduction Policies, (b) Expenditure Switching Policies; The
Monetary Approach to Balance of Payments Adjustment; Balance of Payments Adjustment Through
Controls; Questions.
22. FOREIGN EXCHANGE 332—352
Meaning and Instruments of Foreign Exchange; Foreign Exchange Market—Functions of the Foreign
Exchange Market; Rate of Exchange; Determination of Equilibrium Exchange Rate; Spot and Forward
Rates of Exchange—(a) Interest Arbitrage, (b) Hedging, (c) Speculation, (d) Swap Operations;
Theories of Exchange Rate Determination—(1) The Mint Parity Theory, (2) The Purchasing Power
Parity (PPP) Theory—(i) The Absolute Version, (ii) The Relative Version, Criticism, Empirical Tests
of PPP Hypothesis, (3) The Balance of Payments Theory, (4) The Monetary Approach to Rate of
Exchange, (5) The Portfolio Balance Approach; Factors Causing Variations in Exchange Rates;
Questions.
23. FOREIGN EXCHANGE RATE POLICY 353—386
Fixed or Pegged Exchange Rate System; Arguments For and Against Fixed or Stable Exchange
Rates; Flexible or Fluctuating Exchange Rate System; Arguments For and Against Flexible or
Fluctuating Exchange Rates; Fixed Versus Flexible Exchange Rates; Policy of Managed Flexibility—
(1) Adjustable Peg System, (2) Crawling Peg System, (3) Policy of Managed Floating, European
Snake, Clean Float, Dirty Float; Multiple Exchange Rates—Merits and Demerits; Optimum Currency
Areas; Exchange Controls—Meaning and Objectives; Methods of Exchange Control—(i) Direct
Methods, (ii) Indirect Methods; Merits and Demerits of Exchange Control; Current Account
Convertibility of the Rupee; Capital Account Convertibility of the Rupee; Recommendations of
Committee on Capital Account Convertibility; Move Towards Capital Account Convertibility; Slide
of Rupee Against Dollar; Questions.
24. INTERNATIONAL CAPITAL MOVEMENTS 387—413
Meaning and Classification of International Capital Movements; Factors Influencing International
Capital Movements; Role of International Capital Movements—Benefits, Dangers; Tied and Untied
Foreign Aid; Amount of Foreign Aid and Development; Foreign Aid Versus Trade; Case For and
Against Foreign Direct Investments; Case For and Against Portfolio Investments; Multinational
 Corporations—Spread of MNC’s, Role of MNC’s, Adverse Effects of MNC’s, Regulation of MNC’s;
MNC’s and India; Output and Welfare Effects of International Capital Flows; Other Effects of
International Capital Flows; The Transfer Problem; Adjustment Between Real and Financial Transfers
and Terms of Trade; Questions.
25. INTERNAL AND EXTERNAL BALANCES 414—431
Internal and External Balances; The Swan Model; The Assignment Problem; The Mundellian Model
of Internal and External Stability, Criticism of Mundell—Fleming Model; Asset Markets, Expectations
and Exchange Rate; Internal and External Balances Through Monetary-Fiscal Policy Mix—Derivation
of IS Function, Derivation of LM Function, Derivation of BOP Function (B), (1) Internal and External
Balances Through Monetary-Fiscal Policy Mix Under Fixed Exchange System—(i) Internal
Unemployment and BOP Deficit, (ii) Internal Inflation and BOP Deficit, (iii) Internal Unemployment
and BOP Surplus, (iv) Internal Inflation and BOP Surplus, (2) Internal and External Balances Through
Monetary-Fiscal Policy Mix Under Flexible Exchange System—(i) Internal Unemployment and BOP
Deficit, (ii) Internal Inflation and BOP Deficit, (iii) Internal Unemployment and BOP Surplus, (iv)
Internal Inflation and BOP Surplus; Questions.
26. INTERNATIONAL MONETARY SYSTEM 432—439
Bretton Woods System; Breakdown of Bretton Woods System; Monetary System After the Collapse
of Bretton Woods System; Proposals for Reforming the Present Exchange Rate Adjustment;
Questions.
27. INTERNATIONAL MONETARY FUND AND INTERNATIONAL LIQUIDITY 440—464
International Monetary Fund—Objectives, Organisation, the IMF Quotas, Functions; The Operations
of the IMF—(1) Lending Operation, (2) Operation of Exchange Rate Policy; Conditionality of IMF
Assistance—Criticism; India and the IMF; Assessment of the Working of the IMF—Achievements,
Shortcomings; International Liquidity—Nature, Size, Distribution; Problem of Inadequacy or Shortage
of International Liquidity—Reasons for the Shortage of International Liquidity, Solution to the
Problem; Role of IMF in Enlarging International Liquidity; Special Drawing Rights, Uses of SDR’s,
Critical Appraisal of SDR Scheme; IMF and Group of 20 (G-20); Questions.
28. INTERNATIONAL FINANCIAL INSTITUTIONS 465—484
International Bank for Reconstruction and Development (IBRD) or World Bank—Functions,
Membership, Organisation, Capital Resources; Borrowing Activities of the Bank; Lending Activities
of the Bank; Other Activities of the World Bank; International Development Association (IDA)—
Objectives, Membership, Organisation, Capital Structure; Criteria for IDA Assistance; World Bank
and the IDA; IDA and Less Developed Countries; IDA and India; International Finance Corporation
(IFC)—Objectives, Membership and Organisation, Capital, IFC and the World Bank, Investment
Policy of the IFC, IFC and Developing Countries, IFC and India, Criticism; Asian Development
Bank (ADB)—Functions, Membership, Organisation, Capital Resources, Lending Operations, The
ADB and India, Criticism; Critical Appraisal of the Working of the World Bank; Questions.
29. EURO-CURRENCY MARKET 485—491
Meaning , Origin and Growth; Features of Euro-Currency Market; Operation of Euro-Currency
Market—(a) Fixed Rate Loan, (b) Floating Rate Loans; Role of Euro-Currency Market in International
Financial System; Euro-Currency Market and Developing Countries; Questions.
30. THE GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT) 492—502
GATT and its Objectives; Provisions of the GATT; The GATT Conferences or Rounds of World
Trade Negotiations; The Uruguay Round; The Dunkel Draft; GATT and Developing Countries;
Defects of GATT; Questions.
31. WORLD TRADE ORGANISATION (WTO) 503—512
World Trade Organisation (WTO); Functions of WTO; World Trade Agreement and India; India’s
Commitments to the World Trade Organisation (WTO); WTO and Developing Countries; Issues at
the Recent WTO Negotiations—Seattle Meet, WTO Meet at Cancun, Doha Round; Questions.
32. UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT (UNCTAD)
513—530
Organisation and Functions of UNCTAD; Meetings of UNCTAD; Integrated Programme for
Commodities; Generalised System of Preferences (GSP); Support and Stabilisation of Commodity
Prices—Supporting of Prices in the Long run, Stabilising Prices in the Medium and Short run;
International Buffer Stock Agreements; Price Compensation Agreement; International Quota
Agreements and Multilateral Contract System; Compensatory Finance Schemes; Flow of Development
Finance; Transfer of Technology; South-South Co-operation; Achievements of UNCTAD; Failure
of UNCTAD; Questions.
33. NEW INTERNATIONAL ECONOMIC ORDER (NIEO) 531—540
Origin and Objectives of New International Economic Order (NIEO); Advance Towards NIEO—
An Assessment; International Debt Problem—Causes, Debt Relief Measures; India and External
Debt—Features, Strategy; North-South Dialogue and NIEO; Questions.
34. GLOBALISATION 541—547
Meaning of Globalisation; India’s Move Towards Globalisation; Consequences of Globalisation—
Positive Effects, Negative Effects; Questions.
35. INDIA’S FOREIGN TRADE AND PAYMENTS 548—563
India’s Foreign Trade and Balance of Payments before 1991; India’s Foreign Trade and Balance of
Payments after 1990-91; Trade in Services; Trade Reforms in India; Impact of Trade Reforms; Foreign
Trade Policy (2004-09)—Objectives, Strategy ; Features of FTP (2004-09), Annual Supplement
(2009-14) to Foreign Trade Policy; Questions.
36. GLOBAL ECONOMIC CRISIS 564—577
Introduction; United States and Economic Crisis; Economic Crisis and other Countries—(i) Britain,
(ii) Euro-zone countries, (iii) Japan, (iv) China; India and Recession; Factors Responsible for Recession
in India; Impact of Global Recession on the Indian Economy; Stimulus Packages in India—(1) Monetary
Action, (2) Fiscal Package; Recovery of Global Economy; India’s Recovery from Recession; Questions.
INDEX 578—581
 INDEX
A C Conditionality of IMF Assistance 444-45
Absolute Cost Advantage 14-16 CAC Committee 381-84 Confidence Problem 434
Absolute Cost Differences 14-16 Cairncross, A.K. 153 Consumption Effects of Growth 142-44
Absorption Approach 321-24 Cancun Meet 511 Controls and BOP 329-30
Actual Gain From Trade 182 Capital Account 300-01 Corden, W.M. 225-30
Adam Smith 10, 14-16, 24-26, 177 Capital Account Convertibility Crawling Peg System 365-66
of Rupee 380-84 Current Account 300
Adjustable Peg System 363-65
Capital Flows—Autonomous and Current Account Convertibility of Rupee
Adjustment Problem 434-35
Accommodating 307-08 379-80
Adler, J.H. 396
Capital Movements 325-26,Ch.24, 438 Customs Union Ch.18
Alexander, S. 321-24
Capital-Saving Technical Progress
Anti-dumping Legislation 251-52 152-53 D
Artus, J.R. 320 Carline, A. 394, 395 Deardorff, A.V. 228
ASEAN 280-82 Cassel, G. 342 Debt Relief Measures 536-37
Asian Development Bank (ADB) 477-80 Caves, R.E. 21, 70 Debt Trap 175-76, 535
Asset Market Expectations 422-23 Changes in Income and BOP 324-25 Decreasing Costs and Trade 38-40
Assignment Problem 418-19 Charges on Capital 31-32 Depreciation 310-14
Autonomous and Accommodating Chaudhuri, S. 408 Devaluation 170-71, 310-24
Transactions 307-08 Cheh, J. 254 Devons, E. 164
Civan, E. 134 Diab, M. 83
Clean Float 367-68 Differences in Tastes and Trade 107-108
B
Commodity Stabilisation Fund 534 Differentiated Products and Trade
Baker Plan 536
Commodity Terms of Trade 157-59 106-107
Balance of Payments 3, Chs. 20 and 21
Common Market 258 Dirty Float 367-68
Balance of Payments Theory of
Community Indifference Curve Disequilibrium of BOP 305-07
Exchange Rate 346-48
43-45, 48-49 Doha Round 511-12
Balance of Trade 302
Comparative Cost Advantage 16-21 Domestic Price Changes and BOP 324
Baldwin, R.E. 87, 139, 249, 253, 520
Comparative Costs Differences 16-21 Dorrance, G.S. 161-62
Ball, D.P.S. 90
Comparative Costs Theory Double Factoral Terms of Trade 163-64
Balogh, T. 86 Chs. 2, 3, 5, 57-58
Drucker, P.F. 541
Basic Balance 303 Compensatory Finance Schemes 525
Dumping 245-46
Bastable, C.F. 191 Complementary Trade Theories 105-121
Dunkel Draft 498-99
Bastable Test 191-92 –Differences in Tastes and Trade
Dynamic Effects of Customs Union
Belassa, B. 225 107-108
269-70
Bhagwati, J. 20, 21, 29, 100, 139, –Differentiated Products and Trade
Dynamic gains 185-86
147-49,174, 183-85, 187, 200, 220, 106-107
221, 238, 252, 267, 394, 554 –Economies of Scale and Trade
E
Bhardwaj, R. 83 105-106
Economic Crisis and Other Countries
Blocked Accounts 376 –Emmanuel’s Theory of Unequal
566-70
BOP Function 424-25 Exchange 119-21
Economic Integration Ch. 18
Bowen, H.P. 84, 114 –Keesing’s Theory of Trade 119
Economic Union 258
Brahmanand, P.R. 452 –Kravis Theory of Trade 116-19
Economies of Scale and Trade 105-106
Brady Plan 536, 539 –Linder’s Theory of Demand and
Trade Pattern 115-116 Effective Rate of Protection 225-30
Brander, J.A. 132-33 Effects of Tarrifs 206-11
–Product Cycle Model 113-14
Brander-Krugman Model 130-32 –Under Partial Equilibrium 206-10
–Research and Development
Brandt Commission Report 461 Expenditure and Trade 114 –Under General Equilibrium 210-11
Bretton Woods System 432-37 –Specific Factor Model 108-111 Effective Rate of Tariff 225-30
Bryant, R. 487 –Technological Gap or Imitation Elasticity Approach 315-20
Buchanan, N.S. 87 Gap Model 111-12 Elasticity of Substitution 88
8
Ellsworth, P.T. 16, 19, 59, 75, 78, 87, Flow of Development Finance 525-26 Hicks, J.R. 92-95, 149-53
186, 196, 200, 245, 265, 373 Foreign Aid Ch. 24 Hirsch, S. 113
Emmanuel 119-21 Foreign Aid Vs. Trade 398-99 Hoffmeyer, E. 87
Engine of Growth 153-55 Foreign Direct Investments 399-402 Houthakker, H. 85
Enos, J.L. 393 Foreign Exchange Chs. 22, 23 Hufbauer, G.C. 113
Ethier, W.J. 1, 215 Foreign Exchange Market 333-34
Equal Cost Differences 17 Foreign Trade Multiplier Ch. 19 I
Equilibrium Exchange Rate 335-38 Foreign Trade and Payments of India IBRD or World Bank 404, Ch. 28
Equilibrium of BOP 305-07 Ch. 35
Ichimura, S. 82
Euro 274-76 Foreign Trade Policy (2004-09) 559-62
Imlah, A.H. 161
Euro Bonds 488 Foreign Trade Repurcussion Effect
Immiserising Growth 147-49
Euro-Currency Market Ch. 29 294-97
Import-biased Growth 141-44
Euro-dollar Market Ch. 29 Forward Rate of Exchange 338-40
Frankel, J.A. 438 Import Quotas 232-41
Eurozone Debt Crisis 278-80
Free Trade 182, Ch. 14 Income Terms of Trade 161-62
European Snake 366-67
Free Trade Area 257-58 India and External Debt 537-39
European Union (EU) 271-80
Frey, B. 250 India and Recession 570-76
Exchange Clearing Agreements 376-77
Exchange Controls 372-79 Friedman, M. 310, 311, 365 India’s Recovery from Recession
Fundamental Disequilibrium 306-07 576-77
Exchange Rate Variations 310-14
Ingram, J.C. 416
Exchange Restrictions 375-77
G Integrated Programme for
Expenditure Reduction Policies 326-27
Gains from Trade 18, Ch. 13 Commodities 517-18
Expenditure Switching Policies 327
Export-biased Growth 141-44 GATT 258, Ch. 30 Interest Arbitrage 338-39
Export Multiplier Ch. 19 Gehrels, F. 265 Interest Parity Theorem 422
Export Pessimism 138-40 General Equilibrium 54-55 Internal Balances Ch. 25
Export Subsidies 244-45 Generalised System of Preferences (GSP) International Buffer Stock
External balances Ch. 25 518-20 Agreements 522-24
External Debt of India 537-39 Globalisation Ch. 34 International Cartels 242-44
External Economies 194 Global Economic Crisis Ch. 36 International Debt Problem 535-37
Graham, F. 19-20, 39 International Development
F Greenaway, D. 134 Association (IDA) 470-75
Factor Endowments Ch. 7, 109, Griffin, K.B. 393 International Finance Corporation (IFC)
168, 214-15 Gross Barter Terms of Trade 159-60 475-77
Factor Immobility 7 Grubel, H.G. 124 International Finance Institutions Ch.28
Factor Intensity Ch.7 Gruber, W. 86, 114 International Liquidity Ch. 27, 451-58
Factor Intensity Reversal 88-91, 98 International Monetary Fund (IMF)
Factor Price Equalisation Theory 91-98 H 363, 432-33, Ch. 27
–Hicksian Analysis 92-95 Haberler, G. 32-35, Ch. 6, 77, 158, International Monetary System Ch. 26
–Kindelberger's Analysis 96 187-90, 233, 242, 244, 245, 373 International Quota Agreements 524
–Lerner's Analysis 95 Halm, G.N. 344, 346 International Trade Equilibrium Ch. 4
–Samuelson's Analysis 91-92 Harberger, A.C. 324 Intervention 375
–Sodersten's Analysis 96-97 Harrod-Domar Theory 416-17 Intra-Industry Trade Ch. 10, 270-71
Falvey, R.E. 124 Harrod, R.F. 180 IS Function 423-24
Findlay, R. 62, 178 Harvey, J. 314
Fixed Exchange Rate 353-56, 362-63 Harvey, T. 299 J
Fixed Loan Rate 488 Havrylyshyn, O. 134 J-Curve Effect 320-21
Fleming Model 419-21 Heckscher, E. Chs. 7 and 8 Johnson, H.G. 141, 143, 172, 190,
Flexible or Fluctuating Exchange Rates Heckscher-Ohlin Theory Ch. 7, 8 & 9 225, 330
357-63 Hedging 339-40 Johnson, M. 299, 314
Floating Rate Loans 488-89 Heller, H.R. 68, 98, 106, 181 Jones, R.W. 110
 K Meier, G.M. 157, 398, 414, 416 Offer Curve 47-48, 53, 59-61
Keesing, D.B. 119 Metzler, L.A. 100, 221-23, 318, 319 Ohlin, B. 6, 19, Chs. 7 and 8
Keesing's Theory of Trade 119 Metzler's Paradox 222-23 Oligopolistic Models 130-33
Kemp, M.C. 183-85, 191 Mill, J.S. Ch. 5, 178-79, 191 –Brander-Krugman Model 130-32
Keynes, J.M. 344, 345, 564 Mill's Test 191-92 –Reciprocal Dumping Model 132-33
Kindelberger 69, 96, 164, Milner, C.R. 134 Opportunity Cost Curve 42-43, Ch. 6
170, 207, 209, 210, 217, 236, Minhas, B.S. 85, 90 Opportunity Cost Theory Ch. 6
242, 305, 325, 333, 344, 397 Mint Parity Theory 340-41 Optimum Currency Areas 370-72
Knight, M.D. 320 Mishan, E.J. 103 Optimum Tariff 215-19
Kravis, I.B. 86, 116-19 Monetary Approach to BOP Adjustment Orcutt, G. 320
Kreinin, M. 84 328-29
P
Krueger, A.O. 252 Monetary Approach to Exchange Rate
348-49 Papanek, G. 393
Krugman, P.R. 124, 126, 131-33,
Monetary-Fiscal Policy Mix 423-30 Payments Agreements 377
198, 247, 487
–Under Fixed Exchange System Pegged Exchange Rate 353-56, 362-63
Kyle, J.F. 324
425-28 Peterson, W.C. 299
–Under Flexible Exchange System Phillips Curve 418-19
L 428-30 Physical Criterion 73-74
Labour-Saving Technical Progress Policy of Managed Flexibility 363-68
Moroney, J.R. 85, 90
151-52
Morton 520 Policy of Managed Floating 366-68
Lancaster, K. 79, 100, 128-30, 220
Multi-Commodity Case 32-34 Political Economy of Protection
Lary, H. 90 Ch. 17
Multi-Country Case 34-37
Lawrence, C. 127 Portfolio Balance Approach 349-50
Multi-Fibre Agreement (MFA) 505
Leamer, E.E. 84 Portfolio Investment 402-04
Multinational Corporations 404-09
Leith 59, 186, 196, 200, 245, 265, 373 Posner, M.V. 111
Multiple Equilibria 55
Leontief 82-88, 90 Potential Gain from Trade 182
Multiple Exchange Rates 368-70, 376
Leontief Paradox 82-88 Prebisch, R. 171-75
Mundell, R. 370, 418-23
Lerner, R.P. 95, 223 Prebisch-Singer Thesis 171-75
Mundellian Model of Internal and
Lerner Symmetry Theorem 223 Preferential Trade Area 257
External Stability 419-21
Levacic, R. 423 Price Compensation Agreement 524
Murray, T. 520
Linder, S.B. 115-16, 173 Price Changes and BOP 324
Myint, H. 24
Lipsey Model of Customs Union 265-67 Price Criterion 74-75
Lipsey, R.G. 265-67 Price Differentials 4-6
N
Liquidity Problem 435 Problem of Symmetry 435
Neo-Chamberlinian Models 125-28
Lloyd, P.J. 124 Product Cycle Model 113-14
Neo-Heckscher-Ohlin Model 124-25
LM Function 424 Product Differentiation 78
Neo-Hotelling Models 128-30
Lobbying 250 Production Effects of Growth
Net Barter Terms of Trade 157-59
Neutral Technical Progress 149-51 140-42, 143-44
M Production Possibility Curve 42-43
New International Economic Order
Mac Dougall 21
(NIEO) Ch. 33 Productivity Doctrine 24
Machlup, F. 323 Protection Ch. 14
Nominal Rate of Tariff 225-30
Magee, S.P. 108, 321
Non-Competing Groups 29-31 Protective Instruments 250-51
Malthus, R. 177-78
Non-tariff Barriers of Trade Ch. 16 Purchasing Power Parity (PPP) Theory
Marshall-Lerner Conditions 318-20 341-46
Non-traded Goods 246-47
Martinussen, J. 408
North-South Dialogue 539-40
Maskus, K.E. 84 R
Nurkse, R. 139-40, 345
McKinnon, R.I. 370 Ratchet Effect 361
McLeod, A.M. 172 Rate of Exchange
Meade, J.E. 42-43, 50-51, 258, 307, 365 O 334-35, Chs. 22 and 23
Median Voter 249-50 Objective Indicators 438 Ray, E.J. 253
Mehta, D. 86, 114 Obstfeld, M. 124, 132-33, 198, 247, 487 Real Cost Terms of Trade 164-65
Real Rewards to Factors 223-25 Specie Points 340-41 Transfer of Technology 526-27
Reciprocal Demand Ch. 5, 166-67 Specific Factor Model 108-11 Transfer Problem 411-12
Reciprocal Dumping Model 132-33 –Single Specific Factor Case 108-10 Transport Costs 37-38
Recovery of Global Economy 576 –Two Specific Factors Case 110-11 Travis, W.P. 88
Reed, G. 105, 111, 124, 133, Speculation 340, 351, 360, 389, 435 Triffin Dilemma 435
224, 251, 253, 346 Spiller, P.T. 127 Triffin, R. 361
Refinements of Comparative Costs Spot Rate of Exchange 338-40 Tsiang, S.C. 323
Theory Ch.3 Staehle, H. 161-62 TRIMS 507-08, 510, 543
Regulation Q 486 Static Gains 185 TRIPS 506-07, 509-10, 542-43
Rent Seeking 252-53 Stern, R.M. 84, 228 Tulloch 520
Report of Brandt Commission 461 Stevens 45
Research & Development Stimulus Packages in India 576-77 U
Expenditure and Trade 114 Stopler-Samuelson Theorem Ultra-Export Biased Growth 140-44
Resource Endowments 7-8 98-100, 219-21 Ultra-Import Biased Growth 140-44
Reverse Capital Flow 404, 546 Stopler, W.F. 83, 98-100, 200, 219-21 UNCTAD 398, 401, 405, Ch. 32, 546
Ricardo, D. 16-21, 177-78 Strategic Trade Policy 197-98 UNDP 175, 445, 482, 554
Robertson, D.H. 9, 165 Sunset Industries 195 Untied Foreign Aid 395-96
Robinson, J. 170 Support and Stabilisation of United States and Economic Crisis
Robinson, R. 85 Commodity Prices 520-22 564-66
Rockett, K. 438 Sveikauskas, L. 84 Uruguay Round 497-99
Rosenblatt, J. 245 Swan Model 417-18 Utility Terms of Trade 165-66
Roskamp, K. 83 Swan, T. 417-18
Rybczynski Theorem 100-103 Swap Arrangements 340, 457 V
Rybczynski, T.M. 100-103 Swirling, B.C. 86 Valvaris-Vail 86
Vanek, J. 85, 87, 267-69
S T Vanek Model of Customs Union 267-69
SAARC 282-88 Target Zones 437-38 Venables, A.J. 127
SAFTA 288 Tarriffs 167, Chs. 15, 16 Vent for Surplus 16, 24-26
Salvatore, D. 84, 86, 148, 256, 346, Tarshis, L. 83 Vernon, R. 86, 113
361, 373, 404, 497 Tatemato, M. 82 Viner, J. 39, 73, 161-64, 177
Samuelson, P. 18, 21, 35-37, 70, Taussig, F.W. 28-32, 157, 179 Voluntary Export Restraints 241-42
91-92, 98-100, 110, Technical Progress 149-53
182-83, 200, 219-21 Technological Gap Model 111-12 W
SAPTA 284-85 Temporary Disequlibrium 306 Wahl, D.F. 83
Scammel, W.M. 453-54, 487 Terms of Trade 59-61, 144-45, Wallich, H.C. 311
Scitovsky, T. 456, 462 Ch. 12, 188-89, 204-06, 395 Walsh, V.C. 70
Seattle Meet 511 Terms of Trade Effects 144-45, 212-14 Wealth Effect 146-47
Seigniorage Problem 434 Theories of Exchange Rate Wells, L.T. 113
Secular Deterioration of TOT 171-76 Determination 340-50 Wells, S.J. 88
Singer, H.W. 171-75, 396 Theory of Reciprocal Demand 58-63 Wijanholds 78
Single Factoral Terms of Trade 162-63 Tied Foreign Aid 394-95 Wood, G.E. 371-72
Slide of Rupee 384-85 Tinbergen, J. 256 World Trade Agreement 503-09
Smith, A. 9, 10, 14-16, 24-26, 177, 299 Tobin, J. 438 World Trade Organisation (WTO)
Smithsonian Agreement 366, 436 Tokyo Round 496-97 Ch. 31, 544
Sodersten, B 96-97, 105, 111, 124, Trade Creation 261-65
133, 215, 224, 251, 253, 307, 337, Trade Diversion 261-65
339, 346, 355, 360, 363, 521 Trade Equilibrium 48-53
South Commission 175, 537 Trade Indifference Curve 45-47, 52-53
South-South Co-operation 527-28 Trade in Services 504, 554-55
Special Drawing Rights (SDR's) 457-63 Trade Reforms in India 555-59