Explain the three types of movements or flows within the international economic exchange. Find one example of each type of flow which involved India and Indians, and write a short account of it.
Solution: The three types of movements or flows within the international economic exchange are trade flows, human capital flows and capital flows or investments. These can be explained as the trade in agricultural products, migration of labour, and financial loans to and from other nations.
- The flow of trade (trade in goods, e.g. cloth or wheat)
India was a hub of trade in the pre-modern world, and it exported textiles and spices in return for gold and silver from Europe.
Fine cotton was produced in India and was exported to Europe. With industrialisation, British cotton manufacturing began to expand, and industrialists pressurised the government to restrict cotton imports and protect local industries. As a result of the tariffs that were imposed on cloth imports, the inflow of fine Indian Cotton began to decline.
- The flow of labour (the migration of people in search of employment)
In the field of labour, indentured labour was provided for mines, plantations and factories abroad, in huge numbers, in the nineteenth century. This was an instrument of colonial domination by the British. Indentured labourers were hired under contacts who promised return travel to India after they had worked five years on their employer’s plantation. The living conditions were harsh, and the labourers had little protection from the law or from it as they had few rights.
- The movement of capital (investments)
Britain took generous loans from the USA to finance the World War. Since India was an English colony, the impact of these loan debts was felt in India too. Food and other crops for the world market required capital. Large plantations could borrow it from banks and markets.