Foreign investment and trade
Topic: International Trade: Patterns, Ports and the WTO · NCERT: Class 12, Ch 8 "International Trade"
Meaning
Foreign investment and trade is a basis of international trade. Many developing countries have resources but lack the money, or capital, to use them. Industrial nations invest there in mining, oil drilling, heavy engineering, lumbering and plantations. In return they get food and minerals, plus markets for their own manufactures. Both sides then trade more, so the volume of trade rises.
Example
In colonial times, British capital set up tea plantations in Assam. The tea was shipped to Britain, and British goods were sold in India. Today, foreign direct investment in factories that assemble goods drives exports from Vietnam and Mexico.
Don't confuse with
- Foreign aid: aid is a grant or soft loan given to help a country. Foreign investment is made to earn a profit and to secure supplies.
Related concepts
- Basis of international trade
- Difference in national resources
- Population factors in trade
- Stage of economic development and trade