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Tariff Liberalization and Trade Specialization in India

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Author Info

  • Alessandrini, Michele

    (Universitá di Roma Tor Vergata)

  • Fattouh, Bassam

    (University of London)

  • Ferrarini, Benno

    (Asian Development Bank)

  • Scaramozzino, Pasquale

    (Universitá di Roma Tor Vergata,)

Abstract

Since the early 1990s, India has embarked on economic reforms that have progressively opened up the country to international trade. This paper analyzes the effects of reform on India’s trading structure from 1990 to 2006. It computes comparative advantage indicators on the basis of disaggregated trade flow data, and assesses the effects of trade liberalization on the evolution of India’s pattern of trade specialization. From dynamic panel regression analysis, evidence is found that those industries where import tariffs have been reduced the most have experienced the highest increase in specialization. Moreover, the analysis shows that trade liberalization has helped India improve its comparative advantage in industries with medium- to high-technology content, as well as in some of the industries enjoying the most robust growth in global demand.

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Bibliographic Info

Paper provided by Asian Development Bank in its series ADB Economics Working Paper Series with number 177.

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Length: 26 pages
Date of creation: Nov 2009
Date of revision:
Handle: RePEc:ris:adbewp:0177

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  1. Marc J. Melitz & Gianmarco I. P. Ottaviano, 2008. "Market Size, Trade, and Productivity," Review of Economic Studies, Oxford University Press, vol. 75(1), pages 295-316.
  2. Andrew B. Bernard & Stephen Redding & Peter K. Schott, 2004. "Comparative Advantage and Heterogeneous Firms," NBER Working Papers 10668, National Bureau of Economic Research, Inc.
  3. Joseph Francois & Hanna Norberg & Miriam Manchin, 2008. "Trade Impact Assessment of an EU-India Free Trade Agreement," IIDE Discussion Papers 20080601, Institue for International and Development Economics.
  4. Juan Carlos Hallak & Peter K. Schott, 2011. "Estimating Cross-Country Differences in Product Quality," The Quarterly Journal of Economics, Oxford University Press, vol. 126(1), pages 417-474.
  5. Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
  6. Melitz, Marc J, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," CEPR Discussion Papers 3381, C.E.P.R. Discussion Papers.
  7. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  8. Arvind Panagariya, 2004. "India in the 1980's and 1990's," IMF Working Papers 04/43, International Monetary Fund.
  9. Hausmann, Ricardo & Hwang, Jason & Rodrik, Dani, 2006. "What You Export Matters," CEPR Discussion Papers 5444, C.E.P.R. Discussion Papers.
  10. Arvind Panagariya, 2004. "India in the 1980s and 1990s: A Triumph of Reforms:," International Trade 0403005, EconWPA.
  11. Michele Alessandrini & Bassam Fattouh & Pasquale Scaramozzino, 2007. "The changing pattern of foreign trade specialization in Indian manufacturing," Oxford Review of Economic Policy, Oxford University Press, vol. 23(2), pages 270-291, Summer.
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