IDEAS home Printed from https://ideas.repec.org/a/sae/globus/v25y2024i1p22-39.html

Trade Flow of India with BRICS Countries: A Gravity Model Approach

Author

Listed:
  • Kuldeep Kumar Lohani

Abstract

In this article, we tried to investigate the trade flow of India with the rest of the Brazil, Russia, India, China and South African (BRICS) countries. To do this, we augmented the gravity model of trade by incorporating time-invariant variables such as per capita gross domestic product (PCGDP), distance, language, etc. We used a panel data econometric model (i.e., pooled ordinary least squares—OLS, fixed effect model) and Poisson–Pseudo Maximum Likelihood (PPML) methods. The sample size consists of BRICS countries and top merchandise export partner countries of India over the period of 2001–2016. The empirical results revealed that the traditional arguments of the gravity model in the context of India are valid. However, as distance increases, export of goods is adversely affected due to a higher trade cost. Moreover, common official language and common border positively influence trade. In addition, evidence on marginal trade creation (21% above the normal level) has been observed. The study suggests that the Indian government should negotiate trade dialogues to resolve trade barriers and market access hurdles among the BRICS countries. This will increase exports among nations. Thus, trade relationship among the BRICS members needs to be addressed on a priority basis.

Suggested Citation

  • Kuldeep Kumar Lohani, 2024. "Trade Flow of India with BRICS Countries: A Gravity Model Approach," Global Business Review, International Management Institute, vol. 25(1), pages 22-39, February.
    • Handle: RePEc:sae:globus:v:25:y:2024:i:1:p:22-39
    DOI: 10.1177/0972150920927684
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0972150920927684
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0972150920927684?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Subhash Sharma & Soo Chua, 2000. "ASEAN: economic integration and intra-regional trade," Applied Economics Letters, Taylor & Francis Journals, vol. 7(3), pages 165-169.
    2. Ehsan Rasoulinezhad & Farkhondeh Jabalameli, 2018. "Do BRICS Countries Have Similar Trade Integration Patterns?," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 33(1), pages 1011-1045.
    3. Yang, Shanping & Martinez-Zarzoso, Inmaculada, 2014. "A panel data analysis of trade creation and trade diversion effects: The case of ASEAN–China Free Trade Area," China Economic Review, Elsevier, vol. 29(C), pages 138-151.
    4. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    5. Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-481, August.
    6. Richard Baldwin & Daria Taglioni, 2006. "Gravity for Dummies and Dummies for Gravity Equations," NBER Working Papers 12516, National Bureau of Economic Research, Inc.
    7. Alan V. Deardorff, 2011. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," World Scientific Book Chapters, in: Robert M Stern (ed.), Comparative Advantage, Growth, And The Gains From Trade And Globalization A Festschrift in Honor of Alan V Deardorff, chapter 24, pages 267-293, World Scientific Publishing Co. Pte. Ltd..
    8. Bergstrand, Jeffrey H, 1989. "The Generalized Gravity Equation, Monopolistic Competition, and the Factor-Proportions Theory in International Trade," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 143-153, February.
    9. Masahiro Endoh, 1999. "Trade creation and trade diversion in the EEC, the LAFTA and the CMEA: 1960-1994," Applied Economics, Taylor & Francis Journals, vol. 31(2), pages 207-216.
    10. Bergstrand, Jeffrey H, 1990. "The Heckscher-Ohlin-Samuelson Model, the Linder Hypothesis and the Determinants of Bilateral Intra-industry Trade," Economic Journal, Royal Economic Society, vol. 100(403), pages 1216-1229, December.
    11. Dr. N. KUBENDRAN, 2020. "Trade relation between India and other BRICS countries: A multidimensional approach using Gravity Model and Granger Causality," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(622), S), pages 41-56, Spring.
    12. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(2), pages 441-487.
    13. Robert C. Feenstra & James A. Markusen & Andrew K. Rose, 1998. "Undertstanding the Home Market Effect and the Gravity Equation: The Role of Differentiating Goods," NBER Working Papers 6804, National Bureau of Economic Research, Inc.
    14. Brics,, 2012. "The BRICS Report: A Study of Brazil, Russia, India, China, and South Africa with Special Focus on Synergies and Complementarities," OUP Catalogue, Oxford University Press, number 9780198085386.
    15. Farkhondeh Jabalameli & Ehsan Rasoulinezhad, 2018. "BRICS-United Nations regional groups’ trade patterns: a panel-gravity approach," Journal of Chinese Economic and Foreign Trade Studies, Emerald Group Publishing Limited, vol. 11(2), pages 151-179, April.
    16. Sarah Ellis Barnekow & Kishore G. Kulkarni, 2017. "Why Regionalism? A Look at the Costs and Benefits of Regional Trade Agreements in Africa," Global Business Review, International Management Institute, vol. 18(1), pages 99-117, February.
    17. Bassem Kahouli & Samir Maktouf, 2015. "Trade creation and diversion effects in the Mediterranean area: Econometric analysis by gravity model," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 24(1), pages 76-104, February.
    18. Bergstrand, Jeffrey H. & Egger, Peter & Larch, Mario, 2013. "Gravity Redux: Estimation of gravity-equation coefficients, elasticities of substitution, and general equilibrium comparative statics under asymmetric bilateral trade costs," Journal of International Economics, Elsevier, vol. 89(1), pages 110-121.
    19. Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
    20. Peter Pedroni, 2001. "Purchasing Power Parity Tests In Cointegrated Panels," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 727-731, November.
    21. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-116, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Waqas Younis & Bin Li, 2025. "Exploring the Influence of GSP Plus Status on Pakistan’s Agro-Based Exports to the European Union: Insights from PPML Estimation," SAGE Open, , vol. 15(2), pages 21582440251, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Suhas Jadhav & Ishita Ghosh, 2024. "Future Prospects of the Gravity Model of Trade: A Bibliometric Review (1993–2021)," Foreign Trade Review, , vol. 59(1), pages 26-61, February.
    2. Paola Cardamone, 2007. "A Survey of the Assessments of the Effectiveness of Preferential Trade Agreements using Gravity Models," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 60(4), pages 421-473.
    3. Sabeer, Vadakke Cholakkakath, 2025. "International migration and trade: A comparative analysis of China and India," Journal of Asian Economics, Elsevier, vol. 100(C).
    4. Frederik Stender, 2018. "MERCOSUR in gravity: an accounting approach to analyzing its trade effects," International Economics and Economic Policy, Springer, vol. 15(2), pages 501-522, April.
    5. Yvonne Umulisa, 2020. "Estimation of the East African Community's trade benefits from promoting intra‐regional trade," African Development Review, African Development Bank, vol. 32(1), pages 55-66, March.
    6. Andrea Saayman & Paolo Figini & Silvio Cassella, 2016. "The influence of formal trade agreements and informal economic cooperation on international tourism flows," Tourism Economics, , vol. 22(6), pages 1274-1300, December.
    7. Scott L. Baier & Amanda Kerr & Yoto V. Yotov, 2018. "Gravity, distance, and international trade," Chapters, in: Bruce A. Blonigen & Wesley W. Wilson (ed.), Handbook of International Trade and Transportation, chapter 2, pages 15-78, Edward Elgar Publishing.
    8. Estrella Gómez-Herrera, 2013. "Comparing alternative methods to estimate gravity models of bilateral trade," Empirical Economics, Springer, vol. 44(3), pages 1087-1111, June.
    9. Narayan, Seema & Nguyen, Tri Tung, 2016. "Does the trade gravity model depend on trading partners? Some evidence from Vietnam and her 54 trading partners," International Review of Economics & Finance, Elsevier, vol. 41(C), pages 220-237.
    10. Martínez-Zarzoso, Inmaculada & Felicitas, Nowak-Lehmann D. & Horsewood, Nicholas, 2009. "Are regional trading agreements beneficial?: Static and dynamic panel gravity models," The North American Journal of Economics and Finance, Elsevier, vol. 20(1), pages 46-65, March.
    11. Sally Milton & M A B Siddique, 2014. "Trade Creation and Diversion Under the Thailand-Australia Free Trade Agreement (TAFTA)," Economics Discussion / Working Papers 14-26, The University of Western Australia, Department of Economics.
    12. Thomas L. Vollrath & Mark J. Gehlhar & Charles B. Hallahan, 2009. "Bilateral Import Protection, Free Trade Agreements, and Other Factors Influencing Trade Flows in Agriculture and Clothing," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(2), pages 298-317, June.
    13. Kareem, Fatima Olanike & Martinez-Zarzoso, Inmaculada & Brümmer, Bernhard, 2016. "Fitting the Gravity Model when Zero Trade Flows are Frequent: a Comparison of Estimation Techniques using Africa's Trade Data," GlobalFood Discussion Papers 230588, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    14. Adu, Raymond & Litsios, Ioannis & Baimbridge, Mark, 2022. "ECOWAS single currency: Prospective effects on trade," Journal of International Money and Finance, Elsevier, vol. 126(C).
    15. Sadok ACHOUR & Dr. Fatima HADJI, 2021. "Determinants of trade flows to Agadir Agreement countries: gravity model three-way approach," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(2(627), S), pages 125-134, Summer.
    16. Pamela Smith & Xiangwen Kong, 2022. "Intellectual property rights and trade: The exceptional case of GMOs," The World Economy, Wiley Blackwell, vol. 45(3), pages 763-811, March.
    17. Mohd Hussain Kunroo & Irfan Ahmad Sofi & Naushad Ali Azad, 2016. "Trade implications of the Euro in EMU countries: a panel gravity analysis," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 43(2), pages 391-413, May.
    18. Khanal, Ghanashyam & Zhang, Daowei & Prestemon, Jeffrey P., 2024. "A gravity model analysis of trade regulations on wood products exports: Evidence from Cameroon, Ghana, and the republic of Congo," Forest Policy and Economics, Elsevier, vol. 166(C).
    19. Hayakawa, Kazunobu & Yoshimi, Taiyo, 2016. "Gravity with multiple tariff schemes," IDE Discussion Papers 614, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    20. Yoto V. Yotov, 2024. "The evolution of structural gravity: The workhorse model of trade," Contemporary Economic Policy, Western Economic Association International, vol. 42(4), pages 578-603, October.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:globus:v:25:y:2024:i:1:p:22-39. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.imi.edu/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.