46 SOCIAL SCIENTIST if indeed there was 'little trend in sown acreage"? Second, if the estimated linear relation y=±:a+bx is of the type stated above, with a positive value for the intercept a, then the elasticity of y with respect to x cannot be greater than unity. This can be checked by drawing the appropriate diagram. So, the question arises; how Heston accomplished the feat of calculating an elasticity greater than unity (1.62). (Either he obtained a nagative intercept value which the text incorrectly states as positive; or there is something wrong in his method of calculation). However, our concern here is not with Heston's paper (though this should be analysed carefully since its entire methodology of arriving at a series for agricultural outp'it seems highly dubious, being based on a totally unwarranted assumption that yield remained constant). We would here like to offer a few comments on K N Chaudhuri's "Foreign Trade and the Balance of payments" for this raises afresh the question of the applicability of the theory of comparative costs to the Indian trade experience, and also puts forward the provocative suggestion that the nationalist writers' method of calculating unilateral transfers (the 'drain9) by taking the exports surplus, was incorrect. Chaudhuri's paper biginh with a brief overview of those economic theories which he considers relevant to his subject, ranging from the neoclassical exposition of the Ricardian theory of comparative costs, to the models ofRagnar Nurkse and Hia My int. The subsequent sections are mainly descriptive, giving the trends in the structure (commodity and country) of India's trade, where much useful data are summarised. The paper ends with a brief discussion of unilateral transfer from India via the mechanism of multilateral settlements, where Chaudhuri thinks that the effects on the domestic economy could not have been too marked since the foreign trade multiplier would have operated. As regards the most striking feature of our trade experience during the 19th century, namely, the rapid conversion of India from a country producing and exporting manufactured textiles to one specialising in the production and export of commercial crops, Chaudhuri decides that on the whole the theory of comparative costs provides an adequate explanation; it can be supplemented, where necessary, by more 'dynamic' theories such as that of Hia Myint on expanding markets abroad, stimulating home production. Thus, Chaudhuri states: The history of Indian foreign trade, it can be argued, illustrates the operation of both the comparative costs theory and the hypothesis of an expanding market economy. While the decline of textile exports from India, the basis of her pre"19th century trade, can be attributed to differential factor productivity y the expansion of commercial crops for export was a dynamic process which increasingly drew the subsistence sector into the commercial or monetary sector and converted the peasant producers into market oriented farmers" (p812). Again, "When a countrv encounters an unfavourable shift in the foreign demand for its export products owing to uncompetitive cost factors, new commodities next