Trade Complementarity and Similarity Between India and Asean Countries in the context of the RTA

Sarath Chandran, B.P. (2010): Trade Complementarity and Similarity Between India and Asean Countries in the context of the RTA. Published in: The Indian Economic Journal , Vol. Specia, No. December 2010 (27 December 2010): pp. 111-117.

Abstract

The post WTO world trading system is witnessing proliferation of large number of Regional Trade Agreements (RTAs). Regionalism versus Multilateralism debate is not resolved decisively as there are divergent views on the methodology of trade liberalization. The slow pace of multilateral negotiations and lack of consensus among members on major trade issues is undermining the role of WTO and hastening the regionalism process. India after its initial reluctance, exploring the path of regionalism to improve trade performance and to acquire leadership role on regional issues. Realising the importance of East Asia in the emerging global economic order, India signed a FTA with ASEAN which will come in to force from 1st January 2010. For any Regional Trade Agreement (RTA) to be successful, it is imperative on partner countries to have favourable trade structure between them. In this context, the paper looked in to the trade structure of India and ASEAN countries to identify complementary sectors and product groups for enhanced trade cooperation. Trade indices such as Trade Intensity Index (TII) and Revealed Comparative Index (RCA) are constructed for 16 product group to get trade complementarity and Similarity. From the analysis it is revealed that there are complementary sectors and products available between India and ASEAN for greater cooperation. While India got comparative advantage in Food grains, Minerals, Chemicals, Jems and Jewellery and manufactured products, ASEAN countries are in an advantageous position in Electrical goods, electronic products, vegetable oils, rubber products and agricultural products.

• Item Type: MPRA Paper
• Language: English
• Keywords: Regional Trade Agreement, Revealed Comparative Advantage, Trade Intensity Index, ASEAN, India
• Subjects: F - International Economics > F1 - Trade > F15 - Economic Integration; F - International Economics > F1 - Trade > F10 - General; F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade

References

Balassa, Bela. 1965. “Trade Liberalization and Revealed Comparative Advantage”. The Manchester School of Economic and Social Studies, No. 33: 99-123.

Balassa, Bela. 1977. “'Revealed' Comparative Advantage Revisited: An Analysis of Relative Export Shares of the Industrial Countries, 1953-1971”. The Manchester School of Economic & Social Studies, 45(4): 327-44

Baldwin, Richard. 1993. “A domino theory of regionalism‟. CEPR Discussion Paper 857; NBER Working Paper, 4465. Baldwin, R.E. 1997. “The Causes of Regionalism”. The World Economy, 20(7): 865-888.

Batra, Amita and Zeba Khan. 2005. “Revealed Comparative Advantage: An Analysis for India and China”. Indian Council for Research on International Economic Relations (ICRIER), Working Paper No. 168, New Delhi.

Burange, L.G; and Sheetal, J. Chaddha. 2008. “ India‟s Revealed Comparative Advantage in Merchandise Trade”. Department of Economics, University of Mumbai, Working Paper UDE 28/06/2008.

Chow, Peter C. Y. 1990. “The Revealed Comparative Advantage of the East Asian NICs”. The International Trade Journal, 5(2): 235 – 262.

Ferto, Imre and Lionel J. Hubbard. 2002. “Revealed Comparative Advantage and Competitiveness in Hungarian Agri-Food Sectors”. Institute of Economics, Hungary Academy of Sciences, Budapest, Discussion Paper Series 2002/8.

Kawai, Masahiro (2004), „Regional Economic Integration and Cooperation in East Asia,‟ mimeo

Kumar, N. 2002. “Towards an Asian Economic Community: The Relevance of India”. Research and Information System for Non-Aligned and other Developing Countries (RIS), Discussion Paper No.34, New Delhi.

Lipsey. 1960. “The theory of customs unions: A general survey”. Economic Journal, 70 September: 496-513.

Meade, J.E. 1955. “The Theory of Customs Unions”. Amsterdam: North-Holland.

Panagaria, Arvind. 2000. “Preferential Trade Liberalization: The Traditional Theory and New Developments”. Journalof Economic Literature. XXXVIII: 287-331.

Soloaga, Isidro, and L. Alan Winters. 1999. “How Has Regionalism in the 1990s Affected Trade?”. Policy Research Working Paper Series no. 2156. World Bank, Washington, D.C.

Viner, J. 1950. “The customs union issue”. New York: Carnegie Endowment for International Peace.

World Trade Organisation (WTO). 2008. “International Trade Statistics”, Geneva.

World Bank. 2005, “Trade, Regionalism and Development”. Global Economic Prospects, Washington, D. C: World Bank.