Which of the following pairs is/are not correctly matched? 1. Global Value Chains (GVC) : International Product Sharing 2. World Integrated Trade Solutions : Database on GVC related Trade 3. Current Account Deficit (CAD) : Foreign Direct Investment Select the answer using the code given below:

Correct — C, 3 only. Take the pairs in turn. Global value chains really are international product sharing: the Economic Survey 2023-24 defines them as 'international production sharing, where operations are spread across national borders instead of being confined to the exact location, producing a complex product' — a phone designed in one country, with chips from a second, a screen from a third and assembly in a fourth. Pair 1 is sound. The World Integrated Trade Solution is a World Bank platform, built with UNCTAD, the International Trade Centre, the UN Statistics Division and the WTO, that carries trade and tariff data and also runs a dedicated global value chains section publishing GVC trade and GVC output indicators drawn from the major international input-output tables. The Economic Survey uses it for exactly this purpose, reporting from the WITS database that India's GVC-related trade grew almost fourfold, from USD 62.9 billion in 2010 to USD 233.1 billion in 2022. Pair 2 stands too. Pair 3 is the one that breaks. A current account deficit means a country's payments for imported goods, services and income exceed its receipts on the same account; foreign direct investment is a long-term inflow recorded on the capital and financial account. The two are related — FDI is one of the flows that finances a current account deficit — but they are not the same item, and a deficit on one account cannot be equated with an inflow on another. Only the third pair is wrongly matched.

• (a)1 and 2 only — Rejects the two sound pairs and lets the false one through. It also leaves out pair 3, which is the only genuine mismatch in the list.
• (b)2 and 3 only — Right about pair 3, wrong about pair 2. WITS is not merely a tariff database — it hosts a global value chains section, and the Economic Survey draws its GVC-related trade figures for India from it.
• (d)1, 2 and 3 — The all-of-them pick. It would require the standard definition of a global value chain to be wrong as well, and international production sharing is precisely what the term means.

A global value chain splits the making of one product across several countries, so what crosses a border is usually a stage of production rather than a finished article. That is why conventional gross trade figures overstate what each country actually contributes, and why value-added measures are needed. The World Integrated Trade Solution is the World Bank's platform for such work: alongside UN Comtrade merchandise data, UNCTAD's TRAINS tariff and non-tariff data and the WTO's integrated database, it publishes analytical series including export value added and the labour content of exports, and a global value chains section built from the EORA26, WIOD, OECD trade-in-value-added and ADB multi-region input-output tables. The current account, by contrast, belongs to the balance of payments: it records trade in goods and services, income and transfers, while investment flows such as FDI sit on the capital and financial account.

Match-the-pairs items reward elimination, and here one pair is decisively wrong while the other two require knowledge. Start from pair 3, which any candidate can settle: a deficit is not an investment, so pair 3 is mismatched, and option (a) — which does not include 3 — is dead immediately. The question then reduces to whether pair 2 also fails, and the answer turns on whether you know that WITS goes beyond tariffs. It does, and the Economic Survey's own use of it is the cleanest evidence. One caution about that source: the Survey calls WITS 'the WTO's World Integrated Trade Solutions' database, but WITS is a World Bank platform developed in collaboration with the WTO and three other bodies, so do not carry the attribution across as fact. Note also that the paper prints the pair as 'International Product Sharing' where the Survey and the wider literature usually say international production sharing; the sense is the same and it is not what the item is testing. Finally, the relationship in pair 3 is worth keeping straight rather than merely rejecting: FDI does not equal a current account deficit, but strong FDI inflows are one of the healthier ways of financing one, which is why the Economic Survey 2024-25 built its external sector chapter around getting FDI right.

• Economic Survey 2023-24, paragraph 4.26: global value chains refer to international production sharing, with operations spread across national borders to produce a complex product.
• The World Integrated Trade Solution is a World Bank platform built with UNCTAD, the International Trade Centre, the UN Statistics Division and the WTO.
• WITS runs a dedicated global value chains section publishing GVC trade and GVC output indicators from the EORA26, WIOD, OECD TiVA and ADB MRIO input-output tables.
• Using WITS, the Economic Survey reports India's GVC-related trade rising from USD 62.9 billion in 2010 to USD 233.1 billion in 2022, a CAGR of 14.6 per cent between 2018 and 2022.
• A current account deficit records an excess of payments over receipts on goods, services, income and transfers; FDI is an inflow on the capital and financial account that helps finance it.
• Coal and petroleum, business services, chemicals and transport equipment are the products the Survey identifies as driving India's GVC participation.

• Equating a current account deficit with foreign direct investment because FDI is one way of financing it. Financing a thing is not being that thing.
• Assuming WITS carries only tariff and merchandise data; it also publishes value-added and global value chain indicators.
• Reading 'not correctly matched' as 'correctly matched' and inverting the whole answer — a recurring cause of lost marks in pairs items.

Usually as a not-correctly-matched pairs item like this one, sometimes as a single-line question on which account of the balance of payments an item belongs to.

• practice — not a real PYQ

  Foreign direct investment inflows into India are recorded in which one of the following?

  • (a)The current account of the balance of payments
  • (b)The capital and financial account of the balance of payments
  • (c)The revenue account of the Union Budget
  • (d)The errors and omissions head only

  Answer(b) The capital and financial account of the balance of payments — the current account records goods, services, income and transfers, while investment flows such as FDI sit on the capital and financial account.

• practice — not a real PYQ

  The term 'global value chain' is best described by which one of the following?

  • (a)The distribution network of a single multinational within one country
  • (b)International production sharing, with stages of making a product spread across countries
  • (c)A preferential tariff arrangement among neighbouring states
  • (d)The ranking of countries by export value

  Answer(b) International production sharing, with stages of making a product spread across countries — which is why value-added rather than gross trade measures are needed to see what each country contributes.