IDEAS home Printed from https://ideas.repec.org/p/npf/wpaper/21-348.html

Some searches may not work properly. We apologize for the inconvenience.

   My bibliography  Save this paper

Intra-Industry Trade in Manufactured Goods: A Case of India

Author

Listed:
  • Agarwal, Manmohan

    (RIS)

  • Betai, Neha

    (Indian Institute of Management)

Abstract

Since the second world war, it was observed that trade between two countries could not be explained entirely by the classical and neoclassical models of trade that emphasised inter-industry trade. It was found that trade between countries was increasingly dominated by intra-industry trade (IIT), where countries exchanged products that fell in the same category. In this paper, we try to determine the extent of IIT between India and its top fifteen trading patterns. Unlike other papers, we do not simply calculate aggregate IIT for all merchandise trade. Instead, we focus on manufactured products and divide them into ten categories based on their technological content. Our analysis reveals that while India's IIT has increased in recent years, it is not the dominant form of trade between India and its most important partners. When we look at the factors that determine IIT, we find that India's comparative advantage and trade agreements play a positive and significant role in increasing IIT. Lastly, an analysis of the category Medium Technology Manufactures - Process reveals that this sector has potential for higher IIT and gains from it if India can enhance its efficiency and increase its size.

Suggested Citation

  • Agarwal, Manmohan & Betai, Neha, 2021. "Intra-Industry Trade in Manufactured Goods: A Case of India," Working Papers 21/348, National Institute of Public Finance and Policy.
    • Handle: RePEc:npf:wpaper:21/348
    Note: Working Paper 348, 2021
    as

    Download full text from publisher

    File URL: https://www.nipfp.org.in/media/medialibrary/2021/08/WP_348_2021.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mehta, Diva & Mukherjee, Sacchidananda, 2021. "Emerging Issues in GST Law and Procedures: An Assessment," Working Papers 21/347, National Institute of Public Finance and Policy.
    2. Kojima, Kiyoshi, 1964. "The Pattern of International Trade Among Advanced Countries," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 5(1), pages 16-36, June.
    3. Lancaster, Kelvin, 1980. "Intra-industry trade under perfect monopolistic competition," Journal of International Economics, Elsevier, vol. 10(2), pages 151-175, May.
    4. Kundu, Rajendra P. & Pandey, Siddhigyan, 2021. "Multiple Public Goods In Networks," Working Papers 21/345, National Institute of Public Finance and Policy.
    5. Helpman, Elhanan, 1987. "Imperfect competition and international trade: Evidence from fourteen industrial countries," Journal of the Japanese and International Economies, Elsevier, vol. 1(1), pages 62-81, March.
    6. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
    7. Choorikkad Veeramani, 2002. "Intra-industry trade of India: Trends and country-specific factors," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 138(3), pages 509-533, September.
    8. C. Veeramani, 2007. "Industry-Specific Determinants of Intra-Industry Trade in India," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 42(2), pages 211-229, December.
    9. Pandey, Siddhi Gyan, 2021. "Evolution of cooperative networks," Working Papers 21/346, National Institute of Public Finance and Policy.
    10. Papke, Leslie E. & Wooldridge, Jeffrey M., 2008. "Panel data methods for fractional response variables with an application to test pass rates," Journal of Econometrics, Elsevier, vol. 145(1-2), pages 121-133, July.
    11. Priyanka Singh Bhadouria & N.M.P. Verma, 2012. "Intra-industry trade in textile industry: the case of India," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 4(1/2), pages 199-212.
    12. Sanjaya Lall, 2000. "The Technological Structure and Performance of Developing Country Manufactured Exports, 1985-98," Oxford Development Studies, Taylor & Francis Journals, vol. 28(3), pages 337-369.
    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. Sakshi Aggarwal & Debashis Chakraborty & Nilanjan Banik, 2023. "Does Difference in Environmental Standard Influence India’s Bilateral IIT Flows? Evidence from GMM Results," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 22(1), pages 7-30, March.

    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. Sagnik Bagchi & Surajit Bhattacharyya, 2021. "Industry-level determinants of India’s vertical and horizontal IIT," Indian Economic Review, Springer, vol. 56(1), pages 113-145, June.
    2. Pittiglio, Rosanna, 2009. "The Intra-industry Trade for a Highincome Country: New Empirical Evidence for Italy," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 62(2), pages 233-254.
    3. BELLINO, Antonella & CELI, Giuseppe, 2016. "The Migration-Trade Nexus in the Presence of Vertical and Horizontal Product Differentiation," CELPE Discussion Papers 137, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
    4. Sourish Dutta, 2023. "Horizontal and Vertical Differentiation: Approaching Endogenous Measurement in Intra-industry Trade," Papers 2307.10660, arXiv.org, revised Aug 2023.
    5. Dutta, Sourish, 2022. "Two Approaches of Measuring Intra-industry Trade," EconStor Preprints 259000, ZBW - Leibniz Information Centre for Economics.
    6. Pradhan, Jaya Prakash & Zohair, Mohammad, 2014. "Subnational Export Performance and Determinants: Evidence from Two Indian States," MPRA Paper 60029, University Library of Munich, Germany.
    7. Zymek, Robert, 2015. "Factor proportions and the growth of world trade," Journal of International Economics, Elsevier, vol. 95(1), pages 42-53.
    8. Sourish Dutta, 2022. "The Problem of Measuring Intra-industry Trade," Working Papers hal-03681243, HAL.
    9. A K M Azhar & R J R Elliott, 2003. "Economic Integration and the Evolution of Trade: A Geometric Interpretation," Economics Discussion Paper Series 0308, Economics, The University of Manchester.
    10. Yoshida, Yushi, 2013. "Intra-industry trade, fragmentation and export margins: An empirical examination of sub-regional international trade," The North American Journal of Economics and Finance, Elsevier, vol. 24(C), pages 125-138.
    11. Paas, Tiiu, 2002. "Gravity approach for exploring Baltic Sea regional integration in the field of international trade," HWWA Discussion Papers 180, Hamburg Institute of International Economics (HWWA).
    12. Joan A. Martín & Vicente Orts, 2001. "A two-stage analysis of monopolistic competition models of intraindustry trade," Investigaciones Economicas, Fundación SEPI, vol. 25(2), pages 315-333, May.
    13. Fertő, Imre, 2006. "Vertikálisan és horizontálisan differenciált, ágazaton belüli kereskedelem az Európai Unió tejpiacán [Trade within vertically and horizontally differentiated industries on the milk market of the Eu," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(6), pages 526-539.
    14. Isabel Proença & Horácio Faustino, 2015. "Modelling bilateral intra-industry trade indexes with panel data: a semiparametric approach," Computational Statistics, Springer, vol. 30(3), pages 865-884, September.
    15. Antonella Bellino & Giuseppe Celi, 2016. "The Role of Migration in the Variety and Quality of Trade: Evidence from Germany," German Economic Review, Verein für Socialpolitik, vol. 17(1), pages 1-25, February.
    16. Debaere, Peter, 2005. "Monopolistic competition and trade, revisited: testing the model without testing for gravity," Journal of International Economics, Elsevier, vol. 66(1), pages 249-266, May.
    17. Horácio Faustino & Nuno Leitão, 2007. "Intra-Industry Trade: A Static and Dynamic Panel Data Analysis," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 13(3), pages 313-333, August.
    18. Yushi Yoshida & Nuno Carlos Leitão & Horácio Faustino, 2008. "Intra-Industry Trade between Japan and European Countries: a Closer Look at the Quality Gap in VIIT," Working Papers Department of Economics 2008/53, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    19. Bernhofen, Daniel M., 1999. "Intra-industry trade and strategic interaction: Theory and evidence," Journal of International Economics, Elsevier, vol. 47(1), pages 225-244, February.
    20. Bogang Jun & Aamena Alshamsi & Jian Gao & César A. Hidalgo, 2020. "Bilateral relatedness: knowledge diffusion and the evolution of bilateral trade," Journal of Evolutionary Economics, Springer, vol. 30(2), pages 247-277, April.

    More about this item

    Keywords

    Intra-industry trade ; Technological content ; Trade Partners;
    All these keywords.

    JEL classification:

    • 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

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:npf:wpaper:21/348. 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: S.Siva Chidambaram (email available below). General contact details of provider: http://www.nipfp.org.in .

    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.