Ibrahim, Y C; Arunachalam, P(Cochin University Of Science And Technology, February 25, 2015)
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Abstract:
Export has assumed an important place in the development of
any country and considered as the engine of economic growth. India
requires huge amount of foreign exchange for its essential import
and for achieving rapid growth. Millions of job opportunities have to
be created to utilise the youth for nation building. Even though the
country has different sources of foreign exchange, export earning is
the safe way of obtaining it in the long run. Export of high valued
traditional products not only gives foreign exchange, but also
employment to large number of people. Spices are the traditional
products of India whose production process is highly intensive in
semi and unskilled labour, and high domestic and foreign market
prices compared to other traditional products. The new world trade
scenario with the establishment of WTO has affected India’s spices
export considerably.
The study examines the export performance of Indian spices in
the WTO regime taking the export of major spices from 1985 to 2013
using the growth of export, trend and instability in growth rate,
changes in the composition and direction of spices, export
performance ratio and the prospects of spices in earning foreign
exchange during the WTO period and Pre-WTO period.
The analysis reveals that the overall performance of Indian
spices exports during the WTO regime are satisfactory. Export
volume and value increased much during this period. But the
decrease in market share of spices export during the WTO period
reflects that, the favourable conditions in the international market
are not exploited by India. High Revealed Comparative Advantage
(RCA) and Value Elasticity (EV) of major spices amidst the low export
shares shows that export performance of Indian spices during the
WTO regime was not mainly affected by external demand factors as
suggested by Ragnar Nurkse in his Demand Deficiency Thesis, but
because of internal supply factors as suggested in Supply Deficiency
Thesis, (supported by K.S Dhinsha, Dacosta, Goddamwar,etc.). But
the fluctuations of export during the recession and prosperity periods
show that external demand is also a determinant of Indian spices
export. From this one can conclude that both the domestic supply
factors and foreign demand factors influence the export performance
of Indian spices. The long term performance of Indian spices exports
are mainly influenced by domestic supply factors as suggested by
Supply Deficiency Thesis and short term performance is mostly
influenced by external demand factors as suggested by Demand
Deficiency Thesis.