Static and dynamic RCA analysis of India and China in world economy

This study is an attempt to examine similarities and differences in the patterns of revealed comparative advantage (RCA) of India and China in the global market at different levels of classification. The study analyses whether RCAs of these economies have undergone any structural shift/change or whether the pattern of specialization in these economies is competitive or complementary in the world market. The study reveals that India holds a comparative advantage in 9 out of 16 product groups of Harmonized System (HS) classification, 41 out of 97 HS chapters at HS 2‐digit level, and 2377 out of 4163 traded commodities at HS 6‐digit level, while China holds a comparative advantage in 6 out of 16 HS product groups, 45 out of 97 HS chapters at HS 2‐digit level, and 2075 out of 4381 traded commodities at HS 6‐digit level in 2018. Major findings suggest that both the countries have been performing well and broadly maintained their comparative advantage, especially since 2000. A comparative analysis of India and China reveals a small structural change in RCA over time in both economies at disaggregated levels. The study highlights that India and China neither have a competitive nor a complementary relationship in the global market. These findings reflect a scope of independent expansion of the economies of both India and China, without hurting mutual interest in the global market. It may be inferred from the results that mutual cooperation will enhance the competitiveness of both economies and contributes to global economic progress.