AA decline in exports leading to an unfavorable balance of trade
BGrowth of exports resulting in a favorable balance of trade
CIncreased import dependence
DA shift towards a purely service-based economy
Answer:
B. Growth of exports resulting in a favorable balance of trade
Read Explanation:
Economic Impact of Capital Investment in Pre-Independence Kerala
During the pre-independence era, the regions constituting modern Kerala, particularly the princely states of Travancore and Cochin, witnessed significant capital investments in certain key sectors.
These investments were driven by both British colonial interests seeking raw materials and markets, and by the progressive policies of some native rulers.
Key Areas of Capital Investment:
Plantation Sector: Large-scale investments were made in establishing and expanding plantations of cash crops such as rubber, tea, and coffee, especially in the high ranges of Travancore and Malabar. These crops were highly sought after in international markets.
Industrial Sector: Industries that processed local raw materials also received substantial capital. Prominent examples include:
Coir Industry: Utilized coconut husks for ropes, mats, and other products, largely for export.
Cashew Processing: Kerala became a major hub for processing cashew nuts for international trade.
Timber and Plywood: Exploitation of extensive forest resources for export.
Fisheries: Development of fish processing and export.
Impact on Exports and Trade Balance:
The primary objective of these capital investments was often to produce goods for export rather than for domestic consumption.
The growth of these export-oriented industries and plantations led to a substantial increase in the volume and value of exports from the region.
Major ports like Kochi (Cochin) played a crucial role as gateways for these exports to international markets.
As the value of goods exported (e.g., spices, coir products, cashew kernels, rubber, tea) consistently exceeded the value of goods imported into these regions, it resulted in a favorable balance of trade.
A favorable balance of trade signifies that a region earns more foreign currency from its exports than it spends on its imports, which was seen as an indicator of economic strength and profitability for the colonial powers and the local elites involved in trade.
Competitive Exam Relevant Facts:
Travancore, under rulers like Sree Moolam Thirunal, actively promoted industries and plantations, leading to the establishment of the Department of Agriculture and Factories.
The development of the Kochi Port into a major natural harbor facilitated large-scale international trade.
Kerala's unique geographical features (backwaters, high rainfall, specific soil types) made it suitable for these commercial crops and industries.
While a favorable balance of trade indicated economic prosperity in terms of revenue generation, it often came at the cost of exploitation of local labor and resources, a common characteristic of colonial economies.