IDEAS home Printed from https://ideas.repec.org/a/ids/ijtrgm/v7y2014i2p129-144.html
   My bibliography  Save this article

Do free trade agreements promote intra-industry trade? The case of India and its FTAs

Author

Listed:
  • Anjali Ramakrishnan
  • Poornima Varma

Abstract

The paper examines the role of free trade agreements (FTAs) in promoting intra-industry trade (IIT) between India and its selected FTAs - Association of South East Asian Nations (ASEAN), South Asian Free Trade Agreement (SAFTA) and Sri Lanka. IIT is evident for India's trade with Sri Lanka and Singapore whereas the same is low for other countries. Even the observed IIT is mostly in the form of vertical IIT (VIIT). The results based on fixed effects model using gravity equation shows that the FTAs have a significant impact in promoting IIT. This can be attributed to the high levels of VIIT observed after trade agreements are signed. The negative and significant GDP difference confirms the hypothesis of an inverse relationship between the level of IIT and the differences in development of the trading economies. If countries within an FTA are with different levels of development, then the resultant trade would mainly exhibit an inter-industry structure thus indicating possibilities of greater resource adjustment costs.

Suggested Citation

  • Anjali Ramakrishnan & Poornima Varma, 2014. "Do free trade agreements promote intra-industry trade? The case of India and its FTAs," International Journal of Trade and Global Markets, Inderscience Enterprises Ltd, vol. 7(2), pages 129-144.
    • Handle: RePEc:ids:ijtrgm:v:7:y:2014:i:2:p:129-144
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=62855
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sakshi Aggarwal & Debashis Chakraborty, 2020. "Is there any relationship between Marginal Intra-Industry Trade and Employment Change? Evidence from Indian Industries," Working Papers 2044, Indian Institute of Foreign Trade.
    2. Sakshi Aggarwal & Debashis Chakraborty, 2022. "Which Factors Influence India’s Bilateral Intra-Industry Trade? Cross-Country Empirical Estimates," Working Papers 2260, Indian Institute of Foreign Trade.
    3. Vinko Zaninoviæ, 2022. "The intra-industry trade dynamics in CEE countries: The role of trade agreements," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 40(1), pages 129-145.
    4. Pratiksha Chaturvedi & Zaki Hussain & Biswajit Nag, 2015. "SAARC Geopolitics and Trade," South Asian Survey, , vol. 22(1), pages 78-106, March.
    5. Justyna Lapinska, 2014. "Determinants of Intra-Industry Trade in Agricultural and Food Products between Poland and EU Countries," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 3, pages 159-172, September.

    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:ids:ijtrgm:v:7:y:2014:i:2:p:129-144. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=130 .

    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.