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India-Korea Trade and Investment Relations


  • Pravakar Sahoo


  • Durgesh Kumar Rai
  • Rajiv Kumar


Though economic relations between India and Korea have been strengthening, the current size of trade and investment between the two countries is relatively low compared to the size and structural complementarities of the two economies. In this context, the present paper analyses trade and investment relations and explores future areas of potential co-operation between India and Korea. We find that the increase in merchandise trade between the two countries has been mainly because of the changing demand structure and comparative advantages of both the economies in complementary sectors in recent years. The Revealed Comparative Advantage (RCA) analysis, at both the aggregated and disaggregated levels, shows that while Korea has been specialising in a few, high value-added manufacturing products, Indias exports have been more diversified. The analysis also indicates that both the countries have comparative advantages in different products in the same industry, revealing the opportunity for intra-industry trade (IIT). Moreover, the increasing trade complementarity index (TCI) shows that Indian and Korean trade gradually has become more compatible over time, indicating that any agreement between the two countries is likely to enhance trade flows. The trade intensities between the two countries reveal that Korea is doing much better and there is scope for India to improve its export intensity with Korea. The study also suggests the areas where there is huge scope for increased investment and technological collaboration between the two countries. Further, there is huge potential for trade in services in areas such as information technology, science and technology, pharmaceutical industry, broadcasting, tourism, healthcare and human resource development. Removal of tariff and non-tariff barriers, especially sector specific barriers, will give a major boost to bilateral trade and investment relations.

Suggested Citation

  • Pravakar Sahoo & Durgesh Kumar Rai & Rajiv Kumar, 2009. "India-Korea Trade and Investment Relations," Trade Working Papers 22919, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:tradew:22919

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    References listed on IDEAS

    1. J. Paul Dunne & Lawrence Edwards, 2006. "Trade Technology and Employment: A case Study of South Africa," Working Papers 0602, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    2. Sasidharan, Subash, 2006. "Foreign Direct Investment and Technology Spillovers: Evidence from The Indian Manufacturing Sector," MERIT Working Papers 010, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    3. Shishir Saxena, 2011. "Technology and spillovers: evidence from Indian manufacturing microdata," Applied Economics, Taylor & Francis Journals, vol. 43(10), pages 1271-1287.
    4. Sean M. Dougherty, 2009. "Labour Regulation and Employment Dynamics at the State Level in India," Review of Market Integration, India Development Foundation, vol. 1(3), pages 295-337, December.
    5. Fallon, Peter R. & Lucas, Robert E. B., 1993. "Job security regulations and the dynamic demand for industrial labor in India and Zimbabwe," Journal of Development Economics, Elsevier, vol. 40(2), pages 241-275, April.
    6. Greenaway, David & Hine, Robert C. & Wright, Peter, 1999. "An empirical assessment of the impact of trade on employment in the United Kingdom," European Journal of Political Economy, Elsevier, vol. 15(3), pages 485-500, September.
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    Cited by:

    1. Harinder Kohli & Ashok Sharma & Anil Sood (ed.), 2011. "Asia 2050: Realizing the Asian Century," Books, Emerging Markets Forum, edition 1, number asia2050, August.

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    India; Korea; trade; Investment and Barriers;


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