Demystifying the Puzzle between India-UAE Trade: An Analytical Study
The Empirical Economics Letters, 16(12): (December 2017) ISSN 1681 8997
12 Pages Posted: 23 Feb 2018
Date Written: December 31, 2017
UAE was the largest trading partner of India in the fiscal year 2012-13. Over the years, UAE has become world's third largest exports and re-exports centre after Hong Kong and Singapore. First objective of this paper tries to solve the puzzle that how UAE became India‟s top three exporting nations despite small population size. A result of correlations shows that re-exports through UAE played a vital role in strengthening the trade relations between India and UAE and this is possibly the main reason behind this puzzle. Further, second objective explores the future potentials of Indo-UAE bilateral trade. Results of three indices (trade intensity index, trade potential index and revealed comparative advantage index) show that there are several products of potential export interest to both countries, and economic integration is expected to have a positive impact on trade outcomes of both countries.
Keywords: Bilateral Trade, Re-exports, Revealed Comparative Advantage, Trade intensity Index, Trade Potential, Intra-industry Trade
JEL Classification: F10, F13, F14, F15
Suggested Citation: Suggested Citation