Mechanics of Intra-Industry Trade and FTA Implications for India in RCEP

RIS Discussion Paper # 190

38 Pages Posted: 30 Apr 2014 Last revised: 2 May 2014

See all articles by Ram Upendra Das

Ram Upendra Das

Research and Information System for Developing Countries

Jay Dev Dubey

Research and Information System for Developing Countries (RIS), New Delhi

Date Written: March 28, 2014

Abstract

Worldwide, free trade agreements (FTAs) have remained a debatable issue. This paper tries to demystify the recent myths that have surrounded the FTA strategy of India, especially as part of the Look East Policy. The paper does this by analysing the determinants of Intra-Industry Trade (IIT), which has remained as one of the most dominant forms of trade flows, not explained by the traditional trade theories. Most importantly, the paper highlights the economics of IIT in the context of FTAs in a manner not explored before, by building on the new trade theories. The paper demonstrates both theoretically and empirically, with robust econometric estimations, that an FTA in goods among ASEAN 6 countries under RCEP, especially with India’s active presence and greater trade integration can, not only propel Intra-Industry type trade flows in the region under consideration but it can further help sustain such trade flows.

Keywords: RCEP, Free Trade Agreement, Intra-Industry Trade, Tobit

JEL Classification: F11, F12, F14, F15

Suggested Citation

Das, Dr Ram Upendra and Dubey, Jay Dev, Mechanics of Intra-Industry Trade and FTA Implications for India in RCEP (March 28, 2014). RIS Discussion Paper # 190, Available at SSRN: https://ssrn.com/abstract=2430185 or http://dx.doi.org/10.2139/ssrn.2430185

Dr Ram Upendra Das (Contact Author)

Research and Information System for Developing Countries ( email )

India Habitat Centre
Lodhi Road
New Delhi, 110 003
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91-11-24682178 (Phone)
91-11-24682173-74 (Fax)

HOME PAGE: http://www.ris.org.in/

Jay Dev Dubey

Research and Information System for Developing Countries (RIS), New Delhi ( email )

India Habitat Centre
Lodhi Road
New Delhi, 110 003
India
91-11-24682178-80 (Phone)
91-11-24682173-74 (Fax)

HOME PAGE: http://www.ris.org.in/

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