Does economic development cause intra-industry trade? The case of India: 1971 to 2000
AbstractIndia’s intra-industry trade (IIT) is evaluated and analyzed from 1971 to 2000. IIT is found to have an upward trend with a growth rate that is close to the growth rate of GNP. A host of macro economic indicators are cointegrated with IIT suggesting that there is a stable relationship between IIT and the level of economic development of India. The causation of this relationship is not however unidirectional as the existing theoretical literature on IIT suggests. There is bi-directional causality for these variables. This implies that though economic development boosts IIT, it can equally be interpreted as a proxy for economic development and a predictor of future industrial progress rather than one that strictly follows it.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 30961.
Date of creation: 2004
Date of revision: 2004
Intra Industry Trade; Economic Development; Causality;
Find related papers by JEL classification:
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
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