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sufficient to point out the advantages of international division of labour,
unless the revenues resulting from foreign trade transactions can also be
accounted for.6 If, on the contrary, these transactions result in profits for
both the trading partners, the following concerns of development economy
must be considered:
- distribution of foreign trade revenues,
- utilisation of foreign trade revenues, e.g. reinvestment in the
export sector, capital transfer to other countries,
- effects on the economic structure of the country concerned, the
environmental and living conditions of, say, the poorer sections of
society.
To sum up, economic relations between countries with different
levels of development may nurture different forms of cooperation,
whereby bilateral trade would generally hold its ground owing to its
quantitative dimension.
3. Salient features of Indian economy as a backdrop to India's
economic relations with Germany
Indian economy, in fact, also the nation's overall economic development,
is highly heterogeneous. This holds good for both the intersectoral and
intrasectoral levels. Furthermore, there is a distinct economic gap be
tween the east and the west within the country.7 There are several reasons
for the characteristic high degree of heterogeneity on the economic front.
These include the Hindu religion, its caste system, British colonial
heritage and the existing strategies of economic development. A high
degree of risk potential and vulnerability permeates the Indian economy.
Thus it becomes clear that economic relations between Germany and
India must be perceived as part of a much larger context.
Besides extreme heterogeneity, what sets the Indian national
economy apart in the present context is the transformation process it is
being subjected to. The transformation process involving a transition of
Indian economy from rather a socialist pattern to a market economy
system is partly motivated by the country's self-opted liberalisation
policy and partly by the structural adjustment program of the World
Bank. The liberalisation and structural adjustment are based on the
paradigm of "more market and less state' and should therefore be
understood as strategies or ideas for realising the transformation process.
The objectives of liberalisation policy and the structural adjustment
program are largely the same thus enabling both the reform projects to
complement and supplement each other a good deal. A fundamental re
orientation of financial, industrial and trade policy strongly advocated by
