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


Affiliations
1 Senior Lecturer - Economics and Quantitative Analysis Unit, Faculty of Business, Multimedia University, 63100 Cyberjaya, Selangor, Malaysia
2 Research Scholar, Faculty of Business, Multimedia University, 63100 Cyberjaya, Selangor, Malaysia

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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.

Keywords

Competitiveness, Gravity Model, Exports, Panel Data, Trade Agreemen

C33, F11, F15, F41

Paper Submission Date : September 14, 2017 ; Paper sent back for Revision : October 26, 2017 ; Paper Acceptance Date : December 11 , 2017.

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

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Authors

Pritish Kumar Sahu
Senior Lecturer - Economics and Quantitative Analysis Unit, Faculty of Business, Multimedia University, 63100 Cyberjaya, Selangor, Malaysia
Sam Yong Heng
Research Scholar, Faculty of Business, Multimedia University, 63100 Cyberjaya, Selangor, Malaysia

Abstract


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.

Keywords


Competitiveness, Gravity Model, Exports, Panel Data, Trade Agreemen

C33, F11, F15, F41

Paper Submission Date : September 14, 2017 ; Paper sent back for Revision : October 26, 2017 ; Paper Acceptance Date : December 11 , 2017.




DOI: https://doi.org/10.17010/aijer%2F2017%2Fv6i6%2F120115