China's and India's roles in global trade and finance - twin titans for the new millennium?
This paper analyses the integration of China and India into the global economy. To this end, it presents estimates from a gravity model to gauge the overall degree of their trade intensity and the depth of their bilateral trade linkages, as well as selected measures of revealed comparative advantage and economic distance. The paper also reviews the key characteristics of the two countries’ domestic economies that are relevant to their global integration and analyses their financial linkages with the rest of the world. Four main fi ndings stand out. First, considering trade in goods, the overall degree of China’s trade intensity is higher than fundamentals would suggest, whereas the converse is true for India. Second, Chinese goods exports seem to compete increasingly with those of mature economies, while Indian exports remain more low-tech. Third, China’s exports of services tend to complement its exports of goods, while India’s exports are growing only in deregulated sectors, such as IT-related services. Last, China’s and India’s roles in the global financial system are still relatively limited and often complementary to their roles in global trade. JEL Classification: E44, F3, C5.
|Date of creation:||Jan 2008|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +49 69 1344 0
Fax: +49 69 1344 6000
Web page: http://www.ecb.europa.eu/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- GERLACH, Stefan & Peng, Wensheng, 2006.
"Output gaps and inflation in Mainland China,"
China Economic Review,
Elsevier, vol. 17(2), pages 210-225.
- Alejandro Micco & Ernesto Stein & Guillermo OrdoÒez, 2003. "The currency union effect on trade: early evidence from EMU," Economic Policy, CEPR;CES;MSH, vol. 18(37), pages 315-356, October.
- Shang-Jin Wei & Eswar Prasad, 2005.
"The Chinese Approach to Capital Inflows: Patterns and Possible Explanations,"
IMF Working Papers
05/79, International Monetary Fund.
- Eswar Prasad & Shang-Jin Wei, 2007. "The Chinese Approach to Capital Inflows: Patterns and Possible Explanations," NBER Chapters, in: Capital Controls and Capital Flows in Emerging Economies: Policies, Practices and Consequences, pages 421-480 National Bureau of Economic Research, Inc.
- Eswar Prasad & Shang-Jin Wei, 2005. "The Chinese Approach to Capital Inflows: Patterns and Possible Explanations," NBER Working Papers 11306, National Bureau of Economic Research, Inc.
- Ursel Baumann & Filippo di Mauro, 2007. "Globalisation and euro area trade: Interactions and challenges," Occasional Paper Series 55, European Central Bank.
- J. A. Hausman & W. E. Taylor, 1980.
"Panel Data and Unobservable Individual Effects,"
255, Massachusetts Institute of Technology (MIT), Department of Economics.
- Hausman, Jerry A & Taylor, William E, 1981. "Panel Data and Unobservable Individual Effects," Econometrica, Econometric Society, vol. 49(6), pages 1377-98, November.
- Hausman, Jerry A. & Taylor, William E., 1981. "Panel data and unobservable individual effects," Journal of Econometrics, Elsevier, vol. 16(1), pages 155-155, May.
- I-Hui Cheng & Howard J. Wall, 2004.
"Controlling for heterogeneity in gravity models of trade and integration,"
1999-010, Federal Reserve Bank of St. Louis.
- I-Hui Cheng & Howard J. Wall, 2005. "Controlling for heterogeneity in gravity models of trade and integration," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 49-63.
- Lane, Philip R. & Schmukler, Sergio L., 2007.
"The international financial integration of China and India,"
Policy Research Working Paper Series
4132, The World Bank.
- Philip R. Lane & Sergio L. Schmukler, 2006. "The international financial integration of China and India," Proceedings, Federal Reserve Bank of San Francisco, issue Jun.
- Lane, Philip R. & Schmukler, Sergio, 2006. "The International Financial Integration of China and India," CEPR Discussion Papers 5852, C.E.P.R. Discussion Papers.
- Eswar Prasad, 2004. "China's Growth and Integration into the World Economy: Prospects and Challenges," IMF Occasional Papers 232, International Monetary Fund.
- Michael P. Dooley & David Folkerts-Landau & Peter Garber, 2003.
"An Essay on the Revived Bretton Woods System,"
NBER Working Papers
9971, National Bureau of Economic Research, Inc.
- Keith Head & Thierry Mayer & John Ries, 2008.
"How Remote is the Offshoring Threat ?,"
- Keith Head & Thierry Mayer & John Ries, 2009. "How remote is the offshoring threat?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00639596, HAL.
- Keith Head & Thierry Mayer & John Ries, 2008. "How Remote is the Offshoring Threat ?," Sciences Po publications info:hdl:2441/10143, Sciences Po.
- Keith Head & Thierry Mayer & John Ries, 2007. "How Remote is the Offshoring Threat?," Working Papers 2007-18, CEPII research center.
- Head, Keith & Mayer, Thierry & Ries, John, 2007. "How Remote is the Offshoring Threat?," CEPR Discussion Papers 6542, C.E.P.R. Discussion Papers.
- E. Paul Durrenberger, 2005. "Labour," Chapters, in: A Handbook of Economic Anthropology, chapter 8 Edward Elgar.
- Peter Egger & Michael Pfaffermayr, 2003. "The proper panel econometric specification of the gravity equation: A three-way model with bilateral interaction effects," Empirical Economics, Springer, vol. 28(3), pages 571-580, July.
- Barry Bosworth & Susan M. Collins, 2008.
"Accounting for Growth: Comparing China and India,"
Journal of Economic Perspectives,
American Economic Association, vol. 22(1), pages 45-66, Winter.
- Nigel Pain & Isabell Koske & Marte Sollie, 2006. "Globalisation and Inflation in the OECD Economies," OECD Economics Department Working Papers 524, OECD Publishing.
- Alejandro Micco & Ernesto H. Stein & Guillermo Luis Ordoñez, 2003.
"The Currency Union Effect on Trade: Early Evidence from EMU,"
Research Department Publications
4339, Inter-American Development Bank, Research Department.
- Alejandro Micco & Ernesto H. Stein & Guillermo Luis Ordoñez, 2003. "The Currency Union Effect on Trade: Early Evidence from EMU," IDB Publications (Working Papers) 6511, Inter-American Development Bank.
- Fukunari Kimura & Hyun-Hoon Lee, 2006. "The Gravity Equation in International Trade in Services," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 142(1), pages 92-121, April.
- L. Alan Winters & Shahid Yusuf, 2007. "Dancing with the Giants: China, India, and the Global Economy," World Bank Publications, The World Bank, number 6632.
- Peter Mandelson, 2007. "Europe’s trade policy with India and China," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 8(1), pages 3-7, 04.
- Laurence M. Ball, 2006. "Has Globalization Changed Inflation?," NBER Working Papers 12687, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:ecb:ecbops:20080080. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Official Publications)
If references are entirely missing, you can add them using this form.