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Gains and Losses of India-China Trade Cooperation – a Gravity Model Impact Analysis

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Author Info
Swapan K. Bhattacharya ()
Biswanath Bhattacharyay ()

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Abstract

As revealed by the trade intensity indices, India and the People’s Republic of China have significant bilateral trade potential, which remains unexplored until now. These countries are presently negotiating for free trade arrangements among them based on their complementarities. This paper makes an attempt to estimate the likely benefits in terms of gains or losses in imports of both India and China due to different preferential trading arrangements and free trade arrangements using the gravity model. Empirical results show that in the short run India’s potential gain is relatively less compared to China because of its high tariffs but in the long run, India’s gains are higher than China once its tariff levels are brought at par with them. Free trade arrangement is a win-win situation for both countries and is consistent with their growing dominance in the international trade.

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File URL: http://www.cesifo-group.de/DocCIDL/cesifo1_wp1970.pdf
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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 1970.

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Date of creation: 2007
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Handle: RePEc:ces:ceswps:_1970

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Related research
Keywords: PTAs; FTA; gravity model; trade intensity indices; India- People Republic of China; bilateral trade flows; trade creation and trade diversion;

Find related papers by JEL classification:
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
F15 - International Economics - - Trade - - - Economic Integration
F20 - International Economics - - International Factor Movements and International Business - - - General
F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General

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  1. Richard Baldwin, 1993. "A Domino Theory of Regionalism," NBER Working Papers 4465, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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This page was last updated on 2009-12-1.

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