Q. 7

Explain the three types of movements or flows within international economic exchange. Find one example of each type of flow which involved India and Indians and write a short account of it.

Answer :

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.


(i) 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. Many different foods such as potatoes, soya, groundnuts, maize, tomatoes, chilies and sweet potatoes came to India from the Americas after Columbus discovered it.


Fine cottons produced in India were exported to Europe. With industrialization, British cotton manufacture began to expand, and industrialists pressurized the government to restrict cotton imports and protect local industries. Tariffs were imposed on cloth imports and Britain. Consequently the inflow of fine Indian Cotton began to decline.


(ii) 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 laborers were hired under contacts which promised return travel to India after they had worked five years on their employer’s plantation. Nineteenth-century indenture has been described as a new system of slavery. Their living and working conditions were harsh, and there were few legal rights.


(iii) The movement of capital (investments) :


Lastly, Britain took generous loans from 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. Shikaripuri Shroffs and Nattukottai Chettiars were amongst the many groups of bankers and traders who financed export agriculture in central and Southest Asia, using either their own funds or those borrowed from Europeans banks. Indian traders and money lenders also followed Europeans colonizers into Africa. Hyderabadi Sindhi traders, however, ventured beyond Europeans colonies. From the 1860s they established flourishing emporia at busy ports worldwide, selling local and imported curious to tourists.


The British government increased taxes, interest rates, and lowered the prices of products it bought from the colony. Indirectly, but strongly, this affected the Indian economy and people.


All three flows were closely interlinked and affected peoples’ lives.


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