International Trade
Why countries trade, how exchange rates work, and the global trade system.
Comparative Advantage
Countries trade because of comparative advantage — even if one country is better at everything, both benefit by specializing in what they do relatively best. India exports IT services; Saudi Arabia exports oil. Both are better off trading than trying to produce everything domestically.
Exchange Rates
The exchange rate determines how much one currency is worth in terms of another. India's rupee is a managed float — the RBI intervenes to prevent extreme volatility but doesn't fix the rate. A weaker rupee makes exports cheaper but imports more expensive.
- •Comparative advantage explains why trade benefits everyone
- •Current account = trade balance + services + income flows
- •India's top exports: IT services, refined petroleum, pharmaceuticals, gems
- •WTO, FTAs, and trade blocs shape the rules of global trade
💡 Did You Know?
India's IT industry exports over $200 billion annually. Bangalore alone accounts for about 38% of India's IT exports — making it one of the world's largest tech hubs.