IDEAS home Printed from https://ideas.repec.org/a/ris/ecoint/0870.html
   My bibliography  Save this article

Trade Relation between India and other BRICS Countries: A Multidimensional Approach

Author

Listed:
  • Kubendran, Narayanasamy

    (NMIMS University, Bangalore, Karnataka, India)

Abstract

The aim of the study is to explore the trade relation between India and other BRICS nations in the short-run as well as in the long-run. For empirical analysis, this study employed the Granger Causality Test for short-run impact and Gravity Model using Dynamic Ordinary Least Square (DOLS) and Fully Modified Ordinary Least Square (FMOLS) for long-run impact. Granger Causality test results strongly support India’s trade with other BRICS nations. Long-run results from the Gravity model using DOLS and FMOLS found highly significant for the selected variables (GDP, PCGDP, PCGDPD, Exchange Rate, Trade-GDP ratio and Distance) other than inflation and trade agreement. Except for inflation, per capita GDP differential and distance, all the other variables (GDP, PCGDP, Exchange Rate, Trade-GDP ratio and Trade Agreement) have a positive coefficient to the volume of trade of BRICS nations. This implies that the policymakers in India should strengthen their trade relations with other BRICS nations by promoting the made in India, SEZs, EOUs and expanding second-generation reforms to reap the potential benefits from the global economy. Le relazioni commerciali tra l’India e gli altri BRICS: un approccio multidimensionale tramite l’utilizzo del modello gravity e della Granger causalità Lo scopo di questo articolo è studiare la relazione commerciale tra l’India e gli altri paesi BRICS sia nel breve che nel lungo periodo. Nell’analisi empirica è utilizzato il test di Granger causalità per il breve periodo ed i modelli DOLS e FMOLS per il lungo periodo. I risultati del test di Granger causalità supportano fortemente il commercio tra India e gli altri BRICS. I risultati di lungo periodo sono molto significativi per le variabili selezionate (GDP, PCGDP, PCGDPD, tasso di cambio, rapporto PIL/commercio e distanza) più che per l’inflazione e gli accordi commerciali. A parte l’inflazione, il differenziale PIL pro-capite e la distanza, tutte le altre variabili (PIL, PCGDP, tasso di cambio, rapporto PIL/commercio e gli accordi commerciali) hanno un coefficiente positivo rispetto al volume dei commerci tra i paesi BRICS. Questo implica che l’India dovrebbe rafforzare le sue relazioni commerciali con gli altri BRICS promuovendo il Made in India, le zone economiche speciali e le unità ‘export oriented’ ed ampliando le riforme di seconda generazione per raccogliere i potenziali benefici dell’economia globalizzata.

Suggested Citation

  • Kubendran, Narayanasamy, 2020. "Trade Relation between India and other BRICS Countries: A Multidimensional Approach," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 73(2), pages 237-256.
  • Handle: RePEc:ris:ecoint:0870
    as

    Download full text from publisher

    File URL: http://www.iei1946.it/upload/rivista_articoli/allegati/324_kubendranricfinal.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Alan V. Deardorff, 2011. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," World Scientific Book Chapters, in: Robert M Stern (ed.), Comparative Advantage, Growth, And The Gains From Trade And Globalization A Festschrift in Honor of Alan V Deardorff, chapter 24, pages 267-293, World Scientific Publishing Co. Pte. Ltd..
    2. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    3. Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-481, August.
    4. Jeffrey Frankel, 2010. "The Estimated Trade Effects of the Euro: Why Are They Below Those from Historical Monetary Unions among Smaller Countries?," NBER Chapters, in: Europe and the Euro, pages 169-212, National Bureau of Economic Research, Inc.
    5. Aitken, Norman D, 1973. "The Effect of the EEC and EFTA on European Trade: A Temporal Cross-Section Analysis," American Economic Review, American Economic Association, vol. 63(5), pages 881-892, December.
    6. Jeffrey A. Frankel, 1997. "Regional Trading Blocs in the World Economic System," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 72, January.
    7. André Sapir, 1981. "Trade benefits under the EEC generalized system of preferences," ULB Institutional Repository 2013/8290, ULB -- Universite Libre de Bruxelles.
    8. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-116, March.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Qabhobho, Thobekile & Moyo, Clement & Tsaurai, Kunofiwa, 2023. "Complementarity or Substitutability between Outward FDI and Exporting in Influencing Economic Growth: The BRICS Countries Analysis," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 76(2), pages 275-296.
    2. Sadok ACHOUR & Dr. Fatima HADJI, 2021. "Determinants of trade flows to Agadir Agreement countries: gravity model three-way approach," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(2(627), S), pages 125-134, Summer.
    3. Bottasso, Anna & Conti, Maurizio & Santagata, Marta, 2022. "Transport Infrastructure and Trade: A Survey of the Empirical Literature," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 75(4), pages 447-464.
    4. Sharma, Sapana & Karol, Sanju, 2022. "India’s Defence Expenditure and Economic Growth," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 75(1), pages 51-74.
    5. Kuldeep Kumar LOHANI, 2020. "Static and dynamic analysis of intra-industry trade of BRICS countries," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(625), W), pages 107-130, Winter.

    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. Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
    2. Arsalan Ahmed & Qi Jian Hong & Hassan Tahir, 2021. "Analysis of Pakistan–China FTA by propensity score matching with difference in differences," SN Business & Economics, Springer, vol. 1(7), pages 1-29, July.
    3. Céline CARRERE, 2003. "Revisiting the Effects of Regional Trading Agreements on trade flows with Proper Specification of the Gravity Model," Working Papers 200310, CERDI.
    4. Shumilov, Andrei, 2016. "Особенности Оценивания Гравитационных Моделей Международной Торговли [Estimating Gravity Models of International Trade: A Survey]," MPRA Paper 75371, University Library of Munich, Germany.
    5. Dr. N. KUBENDRAN, 2020. "Trade relation between India and other BRICS countries: A multidimensional approach using Gravity Model and Granger Causality," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(622), S), pages 41-56, Spring.
    6. Scott L. Baier & Amanda Kerr & Yoto V. Yotov, 2018. "Gravity, distance, and international trade," Chapters, in: Bruce A. Blonigen & Wesley W. Wilson (ed.), Handbook of International Trade and Transportation, chapter 2, pages 15-78, Edward Elgar Publishing.
    7. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 131-195, Elsevier.
    8. Bahar, Dany & Hausmann, Ricardo & Hidalgo, Cesar A., 2014. "Neighbors and the evolution of the comparative advantage of nations: Evidence of international knowledge diffusion?," Journal of International Economics, Elsevier, vol. 92(1), pages 111-123.
    9. Salvador Gil & Rafael Llorca & J. Antonio Martínez‐Serrano, 2008. "Assessing the Enlargement and Deepening of the European Union," The World Economy, Wiley Blackwell, vol. 31(9), pages 1253-1272, September.
    10. Clougherty, Joseph A. & Grajek, Michał, 2014. "International standards and international trade: Empirical evidence from ISO 9000 diffusion," International Journal of Industrial Organization, Elsevier, vol. 36(C), pages 70-82.
    11. James Harrigan, 2001. "Specialization and the Volume of Trade: Do the Data Obey the Laws?," NBER Working Papers 8675, National Bureau of Economic Research, Inc.
    12. Theo S. Eicher & Christian Henn, 2011. "One Money, One Market: A Revised Benchmark," Review of International Economics, Wiley Blackwell, vol. 19(3), pages 419-435, August.
    13. Peter Egger, 2000. "Teilprojekt 4: Bilaterale Wirtschaftsbeziehungen zwischen der EU und ausgewählten mittel- und osteuropäischen Ländern (MOEL): Entwicklungen der letzten Jahre und Versuch einer Prognose," WIFO Studies, WIFO, number 19262.
    14. Rinaldo Brau & Anna Maria Pinna, 2013. "Movements of People for Movements of Goods?," The World Economy, Wiley Blackwell, vol. 36(10), pages 1318-1332, October.
    15. Chang, Pao-Li & Lee, Myoung-Jae, 2011. "The WTO trade effect," Journal of International Economics, Elsevier, vol. 85(1), pages 53-71, September.
    16. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
    17. repec:hal:spmain:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    18. Bas Straathof & Gert Jan Linders & Arjan Lejour & Jan Möhlmann, 2008. "The internal market and the Dutch economy: implications for trade and economic growth," CPB Document 168, CPB Netherlands Bureau for Economic Policy Analysis.
    19. Tenreyro, Silvana, 2007. "On the trade impact of nominal exchange rate volatility," Journal of Development Economics, Elsevier, vol. 82(2), pages 485-508, March.
    20. Baldwin, Richard & Taglioni, Daria, 2006. "Gravity for Dummies and Dummies for Gravity Equations," CEPR Discussion Papers 5850, C.E.P.R. Discussion Papers.
    21. Ghazalian, Pascal L. & Furtan, W. Hartley, 2008. "The effects of multinational activities on the measurement of home bias," Journal of the Japanese and International Economies, Elsevier, vol. 22(3), pages 401-416, September.

    More about this item

    Keywords

    BRICS; Gravity Model; Granger Causality Model; Foreign Trade; Economic Integration;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • F10 - International Economics - - Trade - - - General
    • F15 - International Economics - - Trade - - - Economic Integration
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • F19 - International Economics - - Trade - - - Other
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

    Statistics

    Access and download statistics

    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:ris:ecoint:0870. 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: Angela Procopio (email available below). General contact details of provider: https://edirc.repec.org/data/cacogit.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.