India's Competitive Advantage and Export Performance : A Gravity Model Approach

This paper investigated India's competitive advantage and the influence of trade gravity variables in determining India's exports with its top 50 trading partners. First, we used the Revealed Comparative Advantages Index (RCA) to study the competitiveness at the two and four-digit HS-classification levels during the period from 2000 - 2014. Later, we applied an augmented gravity model to India's exports and estimated the same in a panel data framework during the same period. Considering the random effect model into analysis, the findings revealed that India's exports with its top trading partners were more sensitive to distance, GDP, population, and real exchange rate. However, to our surprise, we could not find a significant evidence of the effect of trade agreements on India's exports.