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Dynamics and determinants of intra industry trade between India and the Asia Pacific economic cooperation region

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  • Ghulam Mustafa

    (University of Kashmir)

Abstract

Intra-industry trade (IIT) has gained importance among member countries of the Asia-Pacific Economic Cooperation (APEC) region, as it has been one of the main beneficiaries of the international fragmentation of production due to the rapid growth of the region’s economies. India is not a member of APEC, but it has expressed interest in joining APEC since 1991. APEC economies are among India’s largest trading partners, and trade with the APEC region has increased significantly over the past two decades. This study examines IIT between India and APEC from 2001 to 2019 using the feasible generalized least squares (FGLS) method with multiple panel specifications to adjust for country and time effects. The results show that most explanatory variables are statistically significant, with the expected signs, and that India’s IIT is increasing with countries such as Hong Kong (34.88%), the United States (34.79%), and China (27.62%). Additionally, India enjoys higher IIT with several countries that are currently among India’s free trade agreement (FTA) partners, such as Korea (43.75%), Japan (29.03%), Singapore (29.59%), and Thailand (34.09%). The study suggests that India should join the APEC economic forum at the earliest and take appropriate measures to promote trade further and improve market access for its exports by actively pursuing a strategy of signing individual FTAs with APEC member economies and enhancing bilateral trade with the APEC region.

Suggested Citation

  • Ghulam Mustafa, 2025. "Dynamics and determinants of intra industry trade between India and the Asia Pacific economic cooperation region," SN Business & Economics, Springer, vol. 5(8), pages 1-20, August.
    • Handle: RePEc:spr:snbeco:v:5:y:2025:i:8:d:10.1007_s43546-025-00866-z
    DOI: 10.1007/s43546-025-00866-z
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    Keywords

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    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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