IDEAS home Printed from https://ideas.repec.org/a/agr/journl/v1(638)y2024i1(638)p75-94.html
   My bibliography  Save this article

India’s global trade potential. A panel gravity model approach

Author

Listed:
  • Ritu SHEKHAWAT

    (IIS (Deemed to be University), Jaipur, India)

  • C.R. BISHNOI

    (IIS (Deemed to be University), Jaipur, India)

Abstract

In this paper, India’s global trade potential, export potential and import potential with its 29 major trading partners (which contributed 77.63 per cent of India’s global trade in 2021) have been estimated for the year 2021 with the help of augmented panel gravity model. The time span of this study is 31 years, from 1991 to 2021.The variables used for estimating the augmented panel gravity model are GDP, population, per capita GDP, T.R/GDP, bilateral real exchange rate, distance, and three dummy variables, namely, common language, common colonization and common border. Initially, India’s global trade, export and import gravity models were estimated by POLS, EFM and REM and then model selection tests were applied to select the appropriate model. The study suggested that FEM is appropriate for India’s global trade gravity model and REM is appropriate for India’s global export and global import gravity models. However, these models suffered from the problems of cross-section dependence, autocorrelation, and heteroscedasticity. Therefore, finally FGLS method was used to estimate India’s trade, export and import gravity models and then using the FGLS model India’s global trade, export and import potential were estimated for the year 2021. The findings of the study indicate that India is over trading with countries such as China, United States, Australia, Brazil, Indonesia, Iraq, South Korea, Kuwait, Malaysia, Nepal, Qatar, Netherlands, Saudi Arabi, Thailand, United Arab Emirates, Vietnam and South Africa and it has trade potential with Hong Kong, Bangladesh, France, Germany, Italy, Japan, Russian Federation, Nigeria, Singapore, Turkiye, Sri Lanka and United Kingdom. India should focus on boosting trade with these countries as India has strong trade as well as export potential with them. This will help India in strengthening its export revenues and increase its rate of growth.

Suggested Citation

  • Ritu SHEKHAWAT & C.R. BISHNOI, 2024. "India’s global trade potential. A panel gravity model approach," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(638), S), pages 75-94, Spring.
    • Handle: RePEc:agr:journl:v:1(638):y:2024:i:1(638):p:75-94
    as

    Download full text from publisher

    File URL: http://store.ectap.ro/articole/1722.pdf
    Download Restriction: no
    File URL: http://www.ectap.ro/articol.php?id=1722&rid=154
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Muhammad Siddique & Muhammad Abdul Quddus & Asim Iqbal, 2022. "Pakistan’s Global Trade Potential with Selected Trading Partners: A Gravity Model Approach Using Static and Dynamic Panel Data," iRASD Journal of Economics, International Research Alliance for Sustainable Development (iRASD), vol. 4(1), pages 25-37, March.
    2. Saba GULNAZ & Hemlata MANGLANI, 2022. "Does gravity work in the context of India and ASEAN bilateral trade? An application of the FGLS method," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(630), S), pages 143-160, Spring.
    3. Sahar Hassan Khayat, 2019. "A gravity model analysis for trade between the GCC and developed countries," Cogent Economics & Finance, Taylor & Francis Journals, vol. 7(1), pages 1703440-170, January.
    4. Filippini, Carlo & Molini, Vasco, 2003. "The determinants of East Asian trade flows: a gravity equation approach," Journal of Asian Economics, Elsevier, vol. 14(5), pages 695-711, October.
    5. Amita Batra, 2006. "India's Global Trade Potential: The Gravity Model Approach," Global Economic Review, Taylor & Francis Journals, vol. 35(3), pages 327-361.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Inmaculada Martínez-Zarzoso & Laura Márquez-Ramos, 2005. "Does Technology Foster Trade? Empirical Evidence for Developed and Developing Countries," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 33(1), pages 55-69, March.
    2. Paudel, Nawaraj S. & Lahiri, Sajal, 2024. "The effects of state-level foreign manufacturing imports on domestic inter-state and intra-state sales in the U.S.A," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 297-305.
    3. Hanh Vu Thi, 2015. "Essays on the Export Performance of Vietnam/Essais sur la Performance à l'Exportation du Vietnam," ULB Institutional Repository 2013/216765, ULB -- Universite Libre de Bruxelles.
    4. Umar Fachrudin & Fithra Faisal Hastiadi, 2016. "Impact Analysis of Normalized Revealed Comparative Advantageon ASEAN’s Non-Oil and Gas Export Pattern Using Gravity-Model Approach," Working Papers in Economics and Business 201603, Faculty of Economics and Business, University of Indonesia, revised May 2016.
    5. Gharleghi, Behrooz & Popov, Vladimir, 2018. "Changes in the geographical structure of trade in Central Asia: Real flows in the 1989-2016 period versus gravity model predictions," MPRA Paper 89041, University Library of Munich, Germany.
    6. Arjun SINGH & Dr. S.P. PADHI, 2020. "India and trade blocs: A gravity model analysis," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(625), W), pages 217-232, Winter.
    7. Jing Fang & Jinghua Ou & Shujie Yao, 2022. "On COVID‐19 pandemic and China’s foreign trade," The World Economy, Wiley Blackwell, vol. 45(11), pages 3507-3533, November.
    8. Śledziewska Katarzyna & Akhvlediani Tinatin, 2017. "What Determines Export Performances in High‑tech Industries," Central European Economic Journal, Sciendo, vol. 1(48), pages 37-49, November.
    9. Jan Van Hove, 2008. "The Impact of R&D Spillovers on Export Value: Does the Transmission Channel matter?," Working Papers 2008.3, International Network for Economic Research - INFER.
    10. Timo Tohmo & Kari Heimonen & Mika Nieminen, 2021. "Effects of the European Monetary Union on High-Technology Exports," Journal of Industry, Competition and Trade, Springer, vol. 21(2), pages 251-285, June.
    11. Adams, Kweku & Attah-Boakye, Rexford & Yu, Honglan & Chu, Irene & Mali, Dafydd, 2024. "African Continental Free Trade Area and Regional Trade in ICT and Digital Technologies," Journal of International Management, Elsevier, vol. 30(4).
    12. Jing, Shuai & Zhihui, Leng & Jinhua, Cheng & Zhiyao, Shi, 2020. "China’s renewable energy trade potential in the "Belt-and-Road" countries: A gravity model analysis," Renewable Energy, Elsevier, vol. 161(C), pages 1025-1035.
    13. Tanya GANDHI & Shahid AHMED, 2020. "Testifying the role of regulatory environment in trade facilitation: Impact on intra-regional trade in South-Asia," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(625), W), pages 195-216, Winter.
    14. Márquez-Ramos, Laura & Martínez-Zarzoso, Inmaculada, 2010. "The effect of technological innovation on international trade," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 4, pages 1-37.
    15. Matthieu Bussière & Bernd Schnatz, 2009. "Evaluating China’s Integration in World Trade with a Gravity Model Based Benchmark," Open Economies Review, Springer, vol. 20(1), pages 85-111, February.
    16. repec:ebl:ecbull:v:6:y:2005:i:17:p:1-7 is not listed on IDEAS
    17. Farha Fatema & Mohammad Monirul Islam, 2020. "Driving Forces of Marine Fisheries and Seafood Export of Bangladesh: Augmented Gravity Model Approach," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 8(2), pages 106-122, June.
    18. Tamaş Anca, 2020. "Why should the gravity model be taught in business education?," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 14(1), pages 422-433, July.
    19. Dinçer, Gönül, 2014. "Turkey’s Rising Imports from BRICS: A Gravity Model Approach," MPRA Paper 61979, University Library of Munich, Germany.
    20. Ling Feng & Lulan Ge, 2022. "China's OFDI and the economic growth: From the perspective of natural resource," International Studies of Economics, John Wiley & Sons, vol. 17(3), pages 311-333, September.
    21. Norashida Othman & Zulkornain Yusop & Mohd Mansor Ismail & Syamsul Herman Mohammad Afandi, 2021. "Energy Tax and the Downstream Palm Oil Trade Competitiveness Nexus in Malaysia: An Application of GMM Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 11(5), pages 593-599.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:agr:journl:v:1(638):y:2024:i:1(638):p:75-94. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mircea Dinu (email available below). General contact details of provider: https://edirc.repec.org/data/agerrea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.