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Does economic development cause intra-industry trade? The case of India: 1971 to 2000

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  • Banerjee, Sarmila
  • Bhattacharyya, Ranajoy

Abstract

India’s intra-industry trade (IIT) is evaluated and analyzed from 1971 to 2000. IIT is found to have an upward trend with a growth rate that is close to the growth rate of GNP. A host of macro economic indicators are cointegrated with IIT suggesting that there is a stable relationship between IIT and the level of economic development of India. The causation of this relationship is not however unidirectional as the existing theoretical literature on IIT suggests. There is bi-directional causality for these variables. This implies that though economic development boosts IIT, it can equally be interpreted as a proxy for economic development and a predictor of future industrial progress rather than one that strictly follows it.

Suggested Citation

  • Banerjee, Sarmila & Bhattacharyya, Ranajoy, 2004. "Does economic development cause intra-industry trade? The case of India: 1971 to 2000," MPRA Paper 30961, University Library of Munich, Germany, revised 2004.
    • Handle: RePEc:pra:mprapa:30961
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    References listed on IDEAS

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    Cited by:

    1. Aggarwal, Sakshi, 2023. "Intra-industry trade: Revisiting theory and Literature Survey," MPRA Paper 117182, University Library of Munich, Germany.
    2. Aggarwal, Sakshi, 2023. "The empirical measurement and determinants of intra-industry trade for a developing country," MPRA Paper 117112, University Library of Munich, Germany.
    3. Sakshi Aggarwal & Debashis Chakraborty, 2022. "Which Factors Influence India’s Intra-Industry Trade? Empirical Findings for Select Sectors," Global Business Review, International Management Institute, vol. 23(3), pages 729-755, June.
    4. Sakshi Aggarwal & Debashis Chakraborty, 2020. "Labour Market Adjustment and Intra-Industry Trade: Empirical Results from Indian Manufacturing Sectors," Journal of South Asian Development, , vol. 15(2), pages 238-269, August.

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    More about this item

    Keywords

    Intra Industry Trade; Economic Development; Causality;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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