Transport, Communication and International Trade
Transport, communication and trade connect production with consumption. The exam tests network vocabulary, mode comparison, trade balances and the difference between trade and payments.
Core rules
- A transport network has nodes (terminals, towns) and links (roads, rails, routes); density and accessibility measure connectivity.
- Modes differ in cost, speed, flexibility and load: rail suits bulk over land, road suits short haul and door-to-door service, water suits heavy cargo, air suits high-value light goods.
- Communication moves information, not goods; it includes postal, telephone, internet and broadcasting.
- Balance of trade = exports of goods − imports of goods. Balance of payments includes goods, services, transfers and capital flows.
- Trade may be bilateral or multilateral; tariffs, quotas and embargoes are trade barriers.
Worked example
A country exports goods worth ₹2,000 crore and imports goods worth ₹2,500 crore. Its balance of trade is −₹500 crore, a trade deficit. If remittances of ₹300 crore arrive, the current account deficit narrows but does not disappear. Reasoning: remittances are a transfer, not a merchandise export, so they belong in the balance of payments, not the trade balance.
Traps
Do not treat balance of trade and balance of payments as synonyms. Do not count only exports when asked for the balance. Do not confuse entrepôt trade-imports re-exported-with ordinary re-exports. Do not claim communication and transport are the same because both link places.