A Study of Bilateral Trade Flows of China and India

Indian Journal of Science and Technology, Vol 9(15), 2016

7 Pages Posted: 2 Dec 2016

See all articles by Rajesh Panda

Rajesh Panda

Symbiosis International University - Symbiosis Institute of Business Management, Bengaluru

Madhvi Sethi

Symbiosis International University - Symbiosis Institute of Business Management, Bengaluru

M. Kumaran

Symbiosis International University - Symbiosis Institute of Business Management, Bengaluru

Date Written: April 1, 2016

Abstract

Background/Objectives: According to the World Trade Organization data for 2013, China became world’s largest trading nation and India became the 15th largest trading nation. Emerging economies gained a lot of momentum in world trade. This study analyses the trade flows of two of the emerging economies namely China and India with an objective to draw a comparison between the determinants of bilateral trade flows of the two nations using data for a period of 9 years (2004-2013).

Methods/Statistical Analysis: To achieve the objective, gravity model has been applied on a panel dataset for the two countries. The data has been collected from International Monetary Fund (IMF), CEPII’s Geodist database and United Nations Conference on Trade and Development (UNCTAD). The study employs random effects panel regression model to establish the relationship between trade flows and different variables including distance, gross domestic product, per capital income, contiguity, common language and common colonizer. It compares the determinants of trade for India with China.

Findings: The findings of the empirical analysis are in accordance with past literature indicating that India and China trade flows are mostly with geographically closer countries. Additionally, India’s trade flows are with countries having higher GDP but with lower per capita income. China’s trade is influenced by higher per capita income of the trading partner and common language. When crisis is introduced in the analysis, post crisis, common colony became an important influencer of trade for India.

Applications/Improvements: This study helps in identifying the key determinants of India and China’s trade flows. It also provides a pre and post crisis analysis of the trade partnerships which might have future implications for trade policy and trade relations for the two countries.

Keywords: Bilateral Trade, China, Gravity Model, India

Suggested Citation

Panda, Rajesh and Sethi, Madhvi and Kumaran, M., A Study of Bilateral Trade Flows of China and India (April 1, 2016). Indian Journal of Science and Technology, Vol 9(15), 2016, Available at SSRN: https://ssrn.com/abstract=2878701

Rajesh Panda

Symbiosis International University - Symbiosis Institute of Business Management, Bengaluru ( email )

95/1,95/2 Electronic city phase 1
Hosur road
Bengaluru, 560100
India

Madhvi Sethi (Contact Author)

Symbiosis International University - Symbiosis Institute of Business Management, Bengaluru ( email )

Electronic City
Phase I
Bangalore, 560100
India

M. Kumaran

Symbiosis International University - Symbiosis Institute of Business Management, Bengaluru ( email )

95/1,95/2 Electronic city phase 1
Hosur road
Bengaluru, 560100
India

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
69
Abstract Views
287
rank
371,680
PlumX Metrics