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Growth and Pattern of Intra-Industry Trade between India and Bangladesh: 1975–2010

Author

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  • Kumar, Sushil
  • Ahmed, Shahid

Abstract

The present study investigates the intra-industry trade between India and Bangladesh over the period of 1975 to 2010. GL index is used to calculate intra-industry trade at the three-digit level of SITC. The study also calculated the trade complementarity index, and revealed comparative index. The extent of intra-industry trade is high in sectors like crude materials, inedible, except fuels, food and live animals. The study also reveals mismatch between Indian imports and Bangladesh exports. The present study indicates positive effect on consumer surplus and trade using SMART model. Finally, the paper suggests that Bangladesh should diversify his export structure to reduce the bilateral trade deficit on the basis of comparative advantage.

Suggested Citation

  • Kumar, Sushil & Ahmed, Shahid, 2014. "Growth and Pattern of Intra-Industry Trade between India and Bangladesh: 1975–2010," MPRA Paper 61113, University Library of Munich, Germany, revised 29 Dec 2014.
  • Handle: RePEc:pra:mprapa:61113
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    File URL: https://mpra.ub.uni-muenchen.de/61113/1/MPRA_paper_61110.pdf
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    References listed on IDEAS

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    1. Y-c. Chuang, 2002. "The Trade-Induced Learning Effect on Growth: Cross-Country Evidence," Journal of Development Studies, Taylor & Francis Journals, vol. 39(2), pages 137-154.
    2. Suparna Basu & Debabrata Datta, 2007. "India-Bangladsh Trade Relations: Problem of Bilateral Deficit," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 42(1), pages 111-129, July.
    3. De, Prabir & Raihan, Selim & Kathuria, Sanjay, 2012. "Unlocking Bangladesh-India trade : emerging potential and the way forward," Policy Research Working Paper Series 6155, The World Bank.
    4. Shahid Ahmed & Sushil Kumar, 2014. "Impact of Sensitive Lists under SAFTA: Quantitative Assessment using a Partial Equilibrium Modeling," 2014 Papers pah96, Job Market Papers.
    5. Akhtar Hossain & Rizwana Salim Rashid, 1999. "The Political Economy of Bangladesh's Large and Growing Trade Deficits with India," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 38(1), pages 25-68.
    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. Falvey, Rodney E., 1981. "Commercial policy and intra-industry trade," Journal of International Economics, Elsevier, vol. 11(4), pages 495-511, November.
    8. Sanjib Pohit & Nisha Taneja, 2003. "India's Informal Trade with Bangladesh: A Qualitative Assessment," The World Economy, Wiley Blackwell, vol. 26(8), pages 1187-1214, August.
    9. Lancaster, Kelvin, 1980. "Intra-industry trade under perfect monopolistic competition," Journal of International Economics, Elsevier, vol. 10(2), pages 151-175, May.
    10. Helpman, Elhanan, 1981. "International trade in the presence of product differentiation, economies of scale and monopolistic competition : A Chamberlin-Heckscher-Ohlin approach," Journal of International Economics, Elsevier, vol. 11(3), pages 305-340, August.
    11. Flam, Harry & Helpman, Elhanan, 1987. "Vertical Product Differentiation and North-South Trade," American Economic Review, American Economic Association, vol. 77(5), pages 810-822, December.
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    Cited by:

    1. Aggarwal, Sakshi & Chakraborty, Debashis, 2017. "Determinants of India’s Bilateral Intra-Industry Trade over 2001-15: Empirical Results," MPRA Paper 78020, University Library of Munich, Germany.

    More about this item

    Keywords

    Grubel Lloyd index; trade complementarity index; SMART model; economic regionalism;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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