As The World’S 3Rd Largest Economy, India Is An Important

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As the world’s 3rd largest economy, India is an important trade and economic partner for the United States(Martin, Akhtar , Kronstadt , Kumar ,Siskin,2014).There are many resources which are traded between India and United States. This trade may be due to differences between in labour productivity, factor abundance or other factors.example of products traded between India and US include precious stones and metals,aircraft and spacecraft parts,machinery,optical instrument and equipment,textiles,mineral fuel and oil and machinery(Singh,Verma,2016).This trade is due to a fact called comparative advantage which means if countries specialise in producing goods where they have a lower opportunity cost then there will be an increase in economic…show more content…
According to Rajiv Kumar and Abhijit Sen Gupta of ICRIER (the Indian Council for Research on International Economic Relations)six key factors are holding back the competitiveness of India’s manufacturing sector, the presence of entry barriers, labour market rigidities, procedural constraints, exit barriers, emerging skill constraints and infrastructure. Beyond barriers to trade in specific industries, a number of additional hurdles impede trade between India and the United States (and other foreign nations). For example, as the 2012 National Trade Estimate Report on Foreign Trade Barriers notes, “U.S. exporters continue to encounter tariff and nontariff barriers that impede imports of U.S. products, despite the government of India’s on-going economic reform efforts(Singh,Verma,2016). Leontief’s (1953) disproof of the theory was effectively challenged by Leamer (1980), further econometric work yielded little support for H-O theory and many inconsistent findings. H-O theory cannot provide a complete explanation of trade, even in relative terms and even abstracting from government policies. For Ricardian reasons, as mentioned, a country that is particularly efficient at producing some good will export that good, even though its mixture of factor endowments gives it no special cost advantage. Economies of scale are also important, especially in explaining the large volume of trade that occurs among
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