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

Author

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  • 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
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    References listed on IDEAS

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    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.

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    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

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