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W hy export led economy fuels

inflation

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B alance of Payment and Currency

ValuationIf a country's exchange rate is too high, its exportswill become uncompetitive as buyers in foreigncountries require more of their own currency to

pay for themIf, on the other hand, a currency is under-valued,its exports will become cheaper and thereforemore competitive internationally. At the sametime, imports will also become more costly stimulating the production of domesticsubstitutes to replace them. (China)

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India s ExportsRank Commodity Apr-Mar 2009 Apr-Mar 2010(P) %Growth %Share

1GEMS & JEWELLARY 128,575.19 137,200.31 6.71 16.23

2PETROLEUM (CRUDE & PRODUCTS) 123,397.91 132,616.10 7.47 15.69

3 RANSPORT EQUIPMENTS 51,297.79 47,193.05 -8 5.58

4MACHINERY AND INSTRUMENTS 50,341.86 45,325.81 -9.96 5.36

5DRUGS,PHRMCUTES & FINE CHEMLS 40,421.71 42,091.90 4.13 4.98

6OTHER COMMODITIES 34,428.94 40,685.60 18.17 4.81

7RMG COTTON INCL ACCESSORIES 38,522.72 38,051.32 -1.22 4.5

8IRON ORE 21,725.20 28,365.91 30.57 3.36

9MANUFACTURES OF METALS 34,716.67 26,296.82 -24.25 3.11

10ELECTRONIC GOODS 31,301.35 25,997.10 -16.95 3.08

otal

840,755.05 845,125.20 0.52 100

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India s ImportsRank Commodity Apr-Mar 2009 Apr-Mar 2010(P) %Growth %Share

1PETROLEUM, CRUDE & PRODUCTS 419,945.62 411,579.09 -1.99 30.34

2GOLD 91,091.24 132,898.52 45.9 9.8

3ELECTRONIC GOODS 107,127.57 99,386.23 -7.23 7.33

4MACHRY EXCPT ELEC & ELECTRONIC 98,907.90 93,215.11 -5.76 6.87

5PERLS PRCUS SEMIPRCS STONES 76,129.98 76,823.30 0.91 5.66

6 RANSPORT EQUIPMENTS 60,803.24 51,651.39 -15.05 3.81

7COAL,COKE & BRIQUITTES ETC. 45,947.99 41,967.97 -8.66 3.09

8ORGANIC CHEMICALS 35,037.22 40,889.40 16.7 3.01

9IRON & STEEL 41,482.97 36,794.06 -11.3 2.71

10METALIFERS ORES & METAL SCRAP 36,330.97 36,343.60 0.03 2.68

otal

1,374,435.55 1,356,468.65 -1.31 100

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India s Position in Hierachy

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PROXIMITY IN PRODUCT SPACE ANDDIVERSIFICATION STRATEGIES

Why governments should care about productproximity

What is "product space"?What is "proximity"?

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B ilateral Trade

T he advantages of bilateral import promotion

What's promotion of imports?

Why is it important to dance in two?Bilateral import promotion as a micro-foundation of integration

T he process of political policy launch: aschemeT he technical implementation of the policy

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Taming Inflation

Aggressively pursuing Renewable powerenergy creation

Nuclear Power creationHigh investment on RnD

Inflation Targeting monetry policy based on

future probable inflation.R eliance on Seigniorage fiscal repression.