1 - An outline of the approach

Summary

It is well known that during the first decade of economic planning, trade policies in India tended to emphasise import substitution and to neglect export promotion. However, in the 1960s, there was a definite realisation that export growth was an extremely crucial factor in the development process. As a result, exports were given a high priority and export promotion became an important aspect of economic policy. In this study, we shall attempt to analyse India's export trends and export policies in the period 1960 to 1970. Since the foreign trade sector is subject to both domestic and international economic forces, a country's export performance is influenced by a variety of factors. Therefore, as a starting point, it is necessary to outline a general method of analysis which would bring out the main determinants of India's export growth.

We know that the quantum and value of exports from any particular country are largely determined by: (a) the foreign demand for its exports; (b) the commercial policies abroad which affect the trade in products exported by it; (c) the domestic supply of exports, which in turn depends on the domestic production and consumption of exportables; and (d) the domestic policies towards exportables. This kind of rudimentary theoretical analysis is quite useful if one wants to highlight the basic factors which affect exports. In practice, however, such an approach is not sufficient because it remains at the aggregative level.